Bhoothathankettu hydel project: KSEB says decision to scrap ₹81.8-crore contract with Indian-Chinese consortium due to delays, cost hike

A decision was taken to scrap the contract with a consortium of Indian and Chinese firms for the electromechanical works of the 24-MW Bhoothathankettu hydel project on account of the “irresponsible and non-cooperative” stand of the consortium, according to the Kerala State Electricity Board (KSEB).

Attempts were also made to pressure the power utility into shelling out an additional hefty sum for importing equipment, the KSEB maintains.

In April, the KSEB had issued orders for terminating the contract with Sree Saravana Engineering Bhavani Ltd. (SSEB), Tamil Nadu, and Hunan Zhaoyang Generation Equipment Company Ltd., China, following an inordinate delay in the despatch of the third and final consignment of equipment from China.

The KSEB had inked the agreement for the electromechanical works with the consortium for ₹81.80 crore in March 2015. August 2016 was decided as the completion date. While two consignments of electromechanical equipment had arrived from China, the third was inordinately delayed.

In August 2024, Hunan Zhaoyang Generation Equipment Company Ltd informed the KSEB that the equipment had been sold to another Chinese firm, ChangSha XingYue Electrical and Mechanical Equipment Co. Ltd. This company took the stand that they could import it, but at a price of US$ 6.5 million (approximately ₹54 crore).

“Realising it as an attempt to deceive the KSEB, the KSEB demanded that steps be taken for importing the third consignment within 15 days and completing the import within 90 days, failing which the the contract would be cancelled and the consortium blacklisted,” the KSEB said.

Later, Sree Saravana Engineering Bhavani Ltd. informed the KSEB that an additional ₹9.32 crore should be allocated in advance for importing the equipment. The KSEB found this unacceptable as the condition was in violation of the terms of the contract.

“Although the work should have been completed in August 2016, only 86.61% of the it has been completed nine years after the deadline,” the KSEB noted.