Bagasse-based IPPs agree new deals

The cabinet has given the go-ahead for signing revised agreements with eight bagasse-based independent power producers (IPPs), owned by the ruling elite and political barons. According to the revised agreements, the IPPs will reduce their working capital component of tariff by 50% with effect from October 31, 2024. These agreements are estimated to lead to savings of Rs238 billion when operated at full load. The IPPs agreed to change their return on equity (ROE) and return on equity during construction (ROEDC) components of tariff to 17% per annum, calculated at the rupee-dollar exchange rate of 168, with no future dollar indexation, effective from October 31, 2024.