Five IPPs Decide to Terminate Their Contracts With Govt

Five Independent Power Producers (IPPs) have reached an agreement to terminate their Power Purchase Agreements (PPAs). These IPPs will cease operations under their existing contracts once the agreements are finalized. These IPPs would be paid their outstanding dues but only the cost of electricity without any interest or future payments, reported a national daily. The government is also negotiating the past capacity payments of around Rs. 80-100 billion. The IPPs set up on a Build, Operate, Own, and Transfer (BOOT) basis will be handed over to the government, while those not under BOOT will remain with their current owners. This termination is expected to save the government Rs. 300 billion in capacity payments over the next 3 to 10 years and give relief of Rs. 60 billion annually to consumers. The government has identified 17 more IPPs under the same power policies that will transition from the take-or-pay to take-and-pay mode. These IPPs will continue to supply electricity to the government until the establishment of a private power market. Once operational, these IPPs will be allowed to sell electricity directly to clients using reduced wheeling charges. The task force is also focusing on reducing tariffs for wind and solar power plants, with some solar plants currently charging Rs. 27 per unit and wind IPPs charging Rs. 40 per unit.