CHENNAI: After deciding to relocate the stalled Uppur thermal power project to the Udangudi Stage I site, the Tamil Nadu Power Generation Corporation Limited (TNPGCL) has once again engaged Ernst & Young (EY) to study the feasibility of utilising equipment and materials worth about Rs 2,020 crore procured for Uppur at a proposed 800 MW coal-based thermal power plant in Thoothukudi district, raising fresh questions over the fate of the original project.
The government approved the proposed plant through an order dated March 14, 2026. It will use the existing land, coal jetty and common facilities of the 2 × 660 MW Udangudi Stage I project. The latest study aims to identify ways to use equipment procured for the original 2 × 800 MW Uppur project. “EY has been engaged to recommend how the supplied material can be used,” a senior TNPGCL official said.
After the TVK government came to power, Electricity Minister R Nirmalkumar visited the Uppur project site to review and revive it. He alleged that around Rs 6,000 crore had already been spent on the project and a comprehensive assessment was necessary before deciding the next course of action.
The Comptroller and Auditor General's (CAG) performance audit, tabled in the Assembly last month, highlighted the cost of the prolonged delay. TANGEDCO incurred a sunk cost of more than Rs 7,500 crore after putting the project on hold in 2021. BHEL supplied equipment and materials worth about Rs 2,325 crore, but only 13% was utilised, leaving materials worth around Rs 2,020 crore idle for years.
The audit flagged serious planning lapses. TANGEDCO awarded BHEL the main engineering, procurement and construction contract for Rs 5,852 crore and Reliance Infrastructure the balance-of-plant contract for Rs 3,647 crore without securing the entire project land. Acquisition of 5.34 acres of temple land within the plant area remained pending.
The project ran into trouble after residents approached the National Green Tribunal (NGT) over obstruction of natural drainage. The CAG noted that TANGEDCO had failed to identify watercourses despite environmental clearance conditions requiring natural drainage systems to be protected. Reliance Infrastructure achieved only 1% progress before its contract was closed.
The 1,600 MW project in Ramanathapuram district faced environmental, land acquisition and local fishermen-related litigation. On March 17, 2021, the NGT suspended the EPC contracts awarded to BHEL and L&T for six months or until further orders. The TANGEDCO Board decided on April 29, 2021, to shift the project to Udangudi as Stage III, with Uppur to be reconsidered after the legal issues were resolved.
TANGEDCO challenged the NGT order in the Supreme Court on April 16, 2021. The apex court stayed the judgment on July 1. At a review meeting on July 22, the Chief Minister directed officials to reassess the relocation in view of the state's power demand.
A high-level committee comprising three directors and four chief engineers subsequently recommended continuing the project at Uppur. EY, asked to assess its viability, also recommended developing it at the original site in a report submitted on January 7, 2022.
The Board discussed the report on January 19 and ordered further deliberations on March 19. It subsequently referred the matter to the Aravind Subramanian Committee, a subcommittee of the Tamil Nadu Chief Minister's Economic Advisory Council, for expert opinion. The report is awaited.
In August 2024, TANGEDCO commissioned SBI Capital Markets to prepare a detailed feasibility report on reviving the project through the public-private partnership (PPP) route. After receiving a draft report, the utility explored a joint venture with NTPC and NLC India. Both companies declined, citing the high cost of power generation.
With the revival route failing to take off, TNPGCL is now examining whether the stranded equipment can be redeployed at the proposed Thoothukudi plant. The outcome of EY's study could determine the future use of the idle materials, while the original Uppur project remains without a clear execution plan.
March 17, 2021 - NGT suspends EPC contracts amid environmental concerns.
April 16, 2021 - TANGEDCO challenges the NGT order in the Supreme Court.
April 29, 2021 - Board approves shifting the project to Udangudi Stage III.
July 1, 2021 - Supreme Court stays the NGT judgment.
July-October 2021 - Relocation reviewed; a high-level committee recommends retaining Uppur as the project site.
January 7, 2022 - EY recommends developing the project at Uppur.
March 19, 2022 - Board orders further review and refers the matter for expert opinion from the Aravind Subramanian Committee.
August 23, 2024 - SBI Capital Markets commissioned to study revival through PPP.
2025 onwards - Proposed joint venture with NTPC and NLC India fails to materialise over generation costs.
March 14, 2026 - Government approves a proposed 800 MW plant at the Udangudi Stage I site in Thoothukudi district.
September 2026 - EY re-engaged to study reuse of Uppur equipment worth about Rs 2,020 crore.