Tangedco’s 660-MW Ennore Thermal Power Station (ETPS) expansion project has landed in yet another trouble with the State power utility issuing a show cause notice to the contractor, BGR Energy Systems Limited, over an inordinate delay in the project work.
The project, which was originally planned by the AIADMK government in May 2014, was initially slated to be completed by January 2018. However, there have been delays, and now there is a doubt whether it would come on stream.
Initially, the engineering, procurement and construction (EPC) contract for the project was issued to LANCO Infra Tech Ltd. on 27 February, 2014, for a value of ₹3,921.55 crore, according to the information available with the Central Electricity Authority (CEA), under the Union Ministry of Power. However, the contract was terminated on April 9, 2018 due to poor performance. At that time, the physical and financial progress were 18%, according to the Tamil Nadu Energy Department’s policy note for 2023-24.
On December 12, 2019, Tangedco issued a letter of intent (LOI) to BGR for the EPC contract for completion of the remaining work in the project. However, on April 23, 2021, it cancelled the LOI citing failure in providing security deposit-cum-contract performance guarantee and forfeited the earnest money deposit, as per the details provided by BGR in a statement issued on March 23, 2022.
BGR had filed a writ petition before the Madras High Court on 26 April, 2021. The court directed the firm to submit a proposal to Tangedco and if the proposal was accepted by the Tangedco board, a report should be submitted for disposal of writ petition. Tangedco agreed in the court not to proceed with the fresh tender for the project, BGR had said in the statement.
BGR said it had submitted the proposal to Tangedco as per the High Court order, dated April 28, 2021, and the Tangedco had accepted it. A report was also submitted to the court for reinstatement of LOI.
On February 1, 2022, Tangedco issued a letter to BGR for reduction of bank guarantee to 3% of the contract value as per the Government of India’s policy notification, and BGR withdrew its petition before the Madras High Court.
On March 9, 2022, Tangedco reinstated BGR as the contractor. A Letter of Award (LOA) for executing the remaining work on ‘as is where is basis’ condition was also issued for a value of ₹4,442.75 crore, as per State Energy Department’s policy note.
BJP’s Tamil Nadu unit had questioned the rationale behind awarding the contract to BGR, which, in turn, issued a statement denying allegations of procedural violations or favouritism shown by Tangedco. The party’s State president K. Annamalai on Saturday had said that the allegations had been vindicated by the show cause notice.
Confirming the issue of show cause notice, a senior Tangedco official said that the company had replied that they would expedite the project work. However, the official added that the BGR had not shown any progress.
On the next course of action, the official said that though the contract could be cancelled, such a decision can be taken only by the Tangedco board.
As per a June 2023 report of the CEA’s Thermal Project Monitoring Division, BGR has not finalised any sub-vendor so far and also not started any engineering works. It has only started some preliminary civil works.
As per the Energy Department’s policy note, the project was expected to be completed by 2024-25. According to the CEA report, the project cost has increased to ₹5,421.38 crore from ₹4,956 crore and expenditure incurred till December 2017 stood at ₹791.4 crore.
The ETPS expansion project was among the 4,380 MW of coal-based power projects envisaged by the State sector in Tamil Nadu and did not materialise during the 2017-2022 period, as per the data provided in the Draft Electricity Plan published by the CEA.
