BGR Energy Systems has moved the High Court of Madras against the cancellation of a major order earlier placed on the company by Tamil Nadu Generation & Distribution Corporation Ltd. (Tangedco).
In a stock exchange filing, Chennai-headquartered BGR Energy Systems said that Tangedco has cancelled an EPC contract worth Rs.4,442.75 crore placed on the company in December 2019.
Through a communication dated April 23, 2021, Tangedco informed BGR Energy that the letter of intent for the aforementioned contract has been cancelled for non-submission of bank guarantees for security deposit and performance guarantee by the company. Tangedco also informed BGR Energy about the consequential forfeiture of earnest money deposit (EMD) of Rs.5 crore.
BGR Energy Systems has now moved the High Court of Madras for quasing the said cancellation of letter of intent and consequent direction to accept bank guarantees as per Government of India’s instructions issued in the wake of the COVID-19 pandemic.
In December 2019, it may be recalled, Tagendco had placed a Rs.4,442.75-crore EPC contract on BGR Energy Systems for Tangedco’s 1×660-mw Ennore thermal power station expansion project.
The scope of contract includes design, engineering and supply of all equipment, civil works, erection, testing and commissioning of all systems and performance guarantee of power plant.
The completion date envisaged in the contract was 36 months from the date of issuance of the letter of intent, which works out to December 2022.
The contract also envisaged payment up to $114.49 million in foreign currency for imported items. This contract had taken BGR Energy’s outstanding order position then to around Rs.8,460 crore.
Featured photograph shows the Ennore thermal power plant of Tangedco
