CHENNAI: Poor project planning, failure to secure land and statutory clearances, inadequate scrutiny of contractors and delayed decision-making have left four major Tangedco thermal power projects with a combined capacity of 4,900MW facing prolonged delays, with thousands of crores locked up in incomplete assets.
The 1,600MW Uppur Supercritical Thermal Power Project, 1,320MW Ennore SEZ project, 660MW Ennore Thermal Power Station (ETPS) Expansion and 1,320MW Udangudi Supercritical Thermal Power Project were intended to augment the state's generation capacity.
Even though the land for the project had not been secured entirely, Tangedco awarded the main EPC contract at Uppur to BHEL for Rs 5,852 crore and the balance-of-plant contract to Reliance Infrastructure for Rs 3,647 crore. Acquisition of 5.34 acres of temple land within the plant area remained pending.
The project was subsequently stalled after residents approached the National Green Tribunal over obstruction of natural drainage. The CAG noted that Tangedco had failed to identify watercourses in the project area despite the environmental clearance specifically requiring natural drainage systems to be protected.
Reliance Infrastructure made only 1 per cent progress before its contract was closed. BHEL had supplied equipment and material worth about Rs 2,325 crore, but only 13 per cent of it was used, leaving material worth around Rs 2,020 crore idle for years. Tangedco's decision to put the project on hold in 2021 also left it with a sunk cost of more than Rs 7,500 crore, according to the audit.
The ETPS Expansion project exposed weaknesses in contractor selection. Tangedco awarded the Rs 3,960.63-crore contract to LANCO despite indicators of serious financial stress in the company's accounts. The project stalled after 37 months with just 17 per cent progress, and the contract was terminated.
Tangedco then awarded the balance work to BGRESL for Rs 4,442.70 crore. The contractor failed to furnish the required bank guarantee and the contract was cancelled. Despite this, Tangedco later revived the project and reinstated BGRESL without conducting a fresh assessment of its financial position. BGRESL's losses had risen to Rs 475.27 crore by 2020-21. It subsequently completed just 0.60 per cent of the work in 20 months.
At Ennore SEZ, the 1,320MW project, awarded to BHEL for Rs 7,814 crore, was scheduled for completion in March 2018 but remained only 69 per cent complete after a 72-month delay.
The coal conveyor became a major bottleneck. Tangedco obtained environmental clearance for a straight route but had not secured right of way through a private coal stockyard. It subsequently approved a closed pipe conveyor through the Kosasthalaiyar river and mangrove area without fresh environmental clearance.
The NGT ordered removal of the structures after objections over the altered route. Tangedco had to pay Rs 4.12 crore as compensation and Rs 50 lakh to the TNPCB. The coal-handling system also remained incomplete, while equipment worth Rs 169.53 crore was left idle for over three years.
At Udangudi, the 1,320MW project scheduled for commissioning in June 2021 had achieved only 82 per cent progress by March 2024. The CAG attributed the delay to improper planning, delayed drawings, changes in the control system, delayed land handover and ineffective execution.
Approval of project drawings took more than 50 months after Tangedco had to replace its engineering consultant. Tangedco subsequently changed the control-system requirement, taking another 38 months to finalise it. Land required for the seawater intake and outfall system was handed over to BHEL only in February 2021, more than three years late.
Udangudi was also repeatedly hit by flooding. Though the government and environmental clearance had required a surplus water channel from the Ellappanaicken tank, Tangedco failed to provide it. Flooding in 2019 forced construction to stop for more than 15 months, with waterlogging affecting work during subsequent monsoons.
The CAG has recommended stronger financial due diligence before awarding contracts, timely completion of land and statutory clearances, strict adherence to environmental conditions and specific action plans to revive Uppur and complete the delayed projects.