Senate body seeks details of payments to IPPs

ISLAMABAD: Amidst an ongoing criticism of flawed agreements with Independent Power Producers (IPPs), a Senate committee has sought details of all capacity payments made to the IPPs during the last 20 years along with the names of the owners of these power plants.

Capacity payments are made to power plants that remain idle, receiving payments without generating a single unit of electricity due to faulty agreements. These capacity payments are linked to dollar indexation which has increased due to the rupee’s depreciation against the dollar over the past year.

The capacity payments of Rs8.344 trillion have been made to the IPPs during the last 10 years. It has been anticipated that capacity payments of Rs2.1 trillion will be paid to the IPPs during the fiscal year 2024-25.

According to a letter written by the secretary Senate Committee on Power, on the directive of the chairman, the secretary Power Division has been asked to provide copies of the original agreements with the IPPs established in 1992, and the details of price per KW for each plant with comparative analysis of price of the similar plants i.e. cost of the generator and ancillaries, established during those times in the region especially in the developing countries.

Capacity payments of Rs8.3 trillion made to IPPs in last 10 years, says letter

Similarly, the Power Division has been asked to furnish the details of the rates at which energy was purchased by other developing countries at that time. The details of capacity payments made to the power plants during the last 20 years with particular reference to the reasons of such payments have also been sought.

The Power Division has been further asked to provide the details of technical faults in power plants occurred during the last 20 years along with the detail of sponsors of each power plant established in the private sector.

Copies of the agreements to set up wind power plants during the last six years with the details of their rates of energy and the cost at which the plants had been established should also be provided, said the letter. The Power Division was told to furnish a summary of the power policies in force over different periods of time.

The details of the heat efficiency of the plants installed by IPPs, what is the current efficiency level of IPPs, their efficiency at the time of establishment and the best efficiency level of such plants globally should also be provided to the committee.

Information about the country’s total maximum demand indicator (MDI) of electricity should also be provided. The division was asked that the above information should be more focused towards the gas and furnace oil based private power plants established since 1992, having installed capacity of 50 megawatts and above.

The chairman of the committee said the required information should be provided to the committee well before the next meeting which will be scheduled in the last week of July or first week of August so that the members may have ample time to study the information prior to the meeting to have a fruitful, focused and productive discussion.

Published in Dawn, July 20th, 2024