TANGEDCO to revive Uppur, Ennore Expansion thermal plants

CHENNAI: Three years after deciding to shelve two supercritical thermal power projects due to cost overrun and legal issues, Tangedco has decided to revive them – 1,600 MW Uppur and 660 MW Ennore – via public-private partnership (PPP) mode.

The work on the 2x800 MW Uppur Super Critical Thermal Power Plant in Ramanathapuram was stopped on March 18, 2021, following an order passed by NGT. The Ennore Expansion project has remained frozen since April 2018 due to engineering procurement construction contractor issues.

Tangedco has decided to revive the 2 thermal power projects under the PPP mode on ‘as is where is basis’ considering the increasing power demand and future supply scenario in the State.

Until the suspension of works in March 2021, the Rs 12,778 crore Uppur project had achieved physical progress of 35% incurring an expenditure of Rs 5,847 crore, including interest, during the construction. Considering issues like NGT order, land litigation, local fishermen litigation and BOP package re-tendering works, the Tangedco Board on April 29, 2021, accorded approval to shift the existing 2x800 MW Uppur STPP to the Udangudi site as 2x800MW Udangudi Stage-III.

After the DMK came to power, the review meeting of the energy department chaired by Chief Minister Stalin on July 22, 2021, decided to re-study the shifting of the project. Subsequently, Tangedco formed a committee comprising three directors and four chief engineers to re-consider the shifting of the project in August. The committee recommended that the project should not be shifted.

However, Tangedco asked the consultant Ernst & Young to study the viability and feasibility of the project, which also concurred with the committee’s recommendation and submitted its report on January 7, 2022. Tangedco’s board, on March 19, 2022, again wanted to re-study the consultant’s report and referred it to economist Aravind Subramanian, who headed the sub-committee on the power sector. Sources said that the committee recommended to consider reviving the project at Uppur itself through the PPP mode.

For the 660 MW Ennore Expansion Project, Tangedco terminated the contract of the BGRESL after it failed to take up the work in full swing. In August last year, Tangedco issued a show-cause notice to BGRESL over the slow progress of the works and terminated the contract recently.

From the beginning, the project has been delayed due to the EPC contractors. Initially, Tangedco had awarded the contract to Lanco Infra Tect in May 2014. However, Lanco’s contract was terminated on April 9, 2018, after it filed for corporate insolvency and non-performance.

After that, Tangedco floated a fresh tender and awarded the balance of the works contract to BGRESL in March 2019. But the BGRESL failed to submit a performance-banking guarantee on time, which led to the withdrawal of the letter of award in April 2021. However, Tangedco reinstated the BGRESL as the contractor in November 2021 after the DMK government came to power, which became a controversy with the BJP alleging irregularities in it.

When Tangedco terminated Lanco’s contract in April 2018, it incurred an expenditure of Rs 712.26 crore and achieved physical progress of 18%. It has invited bank guarantee of Rs 392.15 crore from the Lanco. However, BGRESL executed only 0.56% of physical works and spent Rs 16 crore.