TN govt scraps second power tender in 3 days over high rates

CHENNAI: Tamil Nadu has cancelled a second short-term power procurement tender in three days after suppliers quoted rates up to Rs 35 per unit, considered unviable, raising concerns over the cost of securing electricity during peak-demand hours.

Electricity Resources and Law Minister R Nirmalkumar said on Thursday that the Tamil Nadu Power Distribution Corporation Ltd (TNPDCL) would reject the latest bids and cancel the tender after finding the quoted prices infeasible.

“Another short-term tender for peak hours opened today. Because the price quoted is not feasible, we are rejecting the bid, and this tender will be cancelled,” he posted on X.

On October 27, the minister announced the cancellation of another tender to procure 1,000 MW during evening peak hours, from 6 pm to midnight, between November 2026 and May 2027. Companies had quoted Rs 37 to Rs 41.50 per unit.

The latest tender, floated on October 22, sought power from November 2026 to January 2027 to meet round-the-clock (RTC) and peak-hour requirements. The bid results showed rates ranging from Rs 8.50 to Rs 35 per unit, with several peak-hour offers at Rs 35.

TNPDCL sought 600 MW of RTC power for November, 300 MW for December and 1,200 MW for January. For morning and evening peak hours, it sought 400 MW each in November, 200 MW each in December and 800 MW each in January.

However, bids for RTC supply fell far short of the requirement. Suppliers offered just 40 MW against 600 MW sought for November, 120 MW against 300 MW for December and 40 MW against 1,200 MW for January. The offers covered 6.7%, 40% and 3.3% of the respective requirements.

Morning supply bids were relatively stronger. Against the requirement of 400 MW in November, 200 MW in December and 800 MW in January, bids covered 440 MW, 250 MW and 932 MW respectively. This amounted to 110%, 125% and 116.5% of the required quantum.

For evening peak hours, bids covered 480 MW against 400 MW sought for November and 295 MW against 200 MW for December. In January, however, bids covered only 520 MW against the requirement of 800 MW. The respective coverage was 120%, 147.5% and 65%.

Despite bids exceeding the required quantum in several slots, TNPDCL decided against proceeding with the tender because of the prices quoted. The tender conditions permit the corporation to reject bids if tariffs are not aligned with prevailing market prices.