On December 12, 2005, the Tamil Nadu Electricity Board (TNEB) gave its approval for taking up the North Chennai Thermal Power Project Unit I (1x600MW). On March 20, 2014, that is, nearly a decade later, the unit was commissioned.
Critically, the time-gap between the scheduled date of commissioning to the actual date of commissioning was 33 months. Due to the delay, the generation loss in commissioning this unit alone was over 10,000 million units (MUs).
Similarly, the Comptroller and Auditor General of India (CAG) has calculated the generation loss due to delay in commissioning of the North Chennai Thermal Power Plant Unit II and Mettur Thermal Plant Stage III to be above 6,500 MUs each. The generation loss in these three units was over 22,500 MUs. For every unit lost, the Tangedco has to purchase power at a higher cost from private sources.
Almost every thermal plant that was commissioned by Tangedco, the State’s power utility in the past few years has seen a delay of 22 to 33 months. While the Vallur Unit I and II were also delayed by over two years, Vallur Unit III is yet to be commissioned. Initially, the Tangedco set August 2014 as deadline. Then Electricity Minister Natham R. Viswanathan assured that the plant would be commissioned in December.
Now the New Year has set in. Tangedco officials still have no answers about the delay and always downplay it, stating that it was not in their hands. “Once, the boiler that was being brought was washed away in floods. These things happen,” says a senior Tangedco official.
In his dissent order (on the power tariff hike), Tamil Nadu Electricity Regulatory Commission member S. Nagalsamy has mentioned about the ‘inordinate delays” in commissioning of new thermal plants.
When the issue was raised by public in their written petitions, the Tangedco replied that it would recover Liquidated Damages (LD) from EPC contractors. They also confirmed that they have retention amount to recover the LD.
The fact remains that if the LD and compensation are recovered, this will either reduce the capital cost of the projects. With this huge revenue, the increase in tariff would not be required, Mr. Nagalsamy contended.
| Thermal Plant | Scheduled Date of commissioning | Date of commercial operations |
|---|---|---|
| Vallur Unit I | October 2010 | November 2012 |
| Vallur Unit II | March 2011 | August 2013 |
| Vallur Unit III | September 2012 | Yet to be commissioned |
| NCTPP Unit I | May 2011 | March 2014 |
| NCTPP Unit II | November 2011 | May 2014 |
| MTPP | September 2011 | October 2013 |
Tangedco higher officials are unwilling to talk about the LD recovered for the recently commissioned thermal units. “It is all in the contract but it is between Tangedco and the contractor. It is not for public knowledge. As per the terms, we recover the LD, once the contract is over,” says a senior official.
Obviously, the LD runs into several thousand crores. The CAG report throws light on this aspect. While the (gross) contract value of the North Chennai Thermal Power Plant Unit I&II and the Mettur Stage III is Rs 7,764 crore, the LD/penalty leviable for the delays works out to Rs 7,418 crore. That is, the LD for delays is almost the value of the contract itself.
Policy-makers are quite surprised. “There has to be a cap. Otherwise, no contractor will take up the work,” says a policy-maker. Tangedco officials, again, refuse to reveal the cap for the above mentioned plants.
However, an affidavit submitted by the Tangedco before the TNERC reveals that the cap for the North Chennai plants is 10 per cent of the contract value of the projects. While the LD works out to almost the contract value, the Tangedco at best can recover only 10 per cent.
For instance, the (gross) contract value of the North Chennai Unit I was Rs 2,475 crore. The LD/penalty leviable was Rs 2,650 crore. Actually the Tangedco can recover only Rs 265 crore.
Whichever way you look at it, the Tangedco is suffering huge losses, running into thousands of crores, due to delay in commissioning of thermal plants. It is the public who end up paying for its inefficiency.
