Navayuga claimed it did not violate any norm and that the sudden pre-closure of tenders without showing any valid reason would not only cause huge financial loss to the company, but also damage its reputation across the country.
The Andhra Pradesh high court on Tuesday admitted an urgent petition filed by Navayuga Engineering Company Limited challenging the Jagan Mohan Reddy government’s move to terminate its contract for the Polavaram irrigation project, including the completion of hydro-power project and call for fresh tenders.
The court heard the arguments from both the Hyderabad-based company and the state government and reserved its judgement.
The Andhra Pradesh government on Saturday called for the completion of the remaining work on the project head including spillway, spill channel, earth-cum-rock-fill dam, coffer dams etc, besides for the construction of Polavaram hydel power station of 960 MW capacity.
The total value of the contract was estimated at Rs 4,970 crore including Rs 1,870 for project head works and Rs 3,100 crore for the hydro power project. Navayuga had bagged the contract in 2017 when N Chandrababu Naidu of the Telugu Desam Party (TDP) was the chief minister.
Senior advocate G Subba Rao, who argued for Navayuga, told the court that the company had not violated any norms in obtaining tenders from the government. With regard to power project, the company had blamed it on the AP power generation corporation (APGenco) for the delay in commencement of the work.
“Despite repeated reminders, the APGenco authorities had not handed over the power project site. Though we told the government that we had already spent Rs 398 crore towards turbines, generators and other electro-mechanical works, besides advance payments to sub-contractors, the government unilaterally cancelled our contract,” the company argued.
Navayuga said the sudden pre-closure of tenders without showing any valid reason would not only cause huge financial loss to the company, but also damage its reputation across the country. “We have time up to November 20, 2021 to complete the hydro power project,” he said.
Advocate General S Sriram, who argued on behalf of the government, said it was not proper on the part of Navayuga to move the high court, and it should approach the arbitration court. He argued that the government had every right to go for fresh tenders as per the contract norms. He appealed to the court to grant permission to go ahead with fresh tenders for Polavaram.
Meanwhile, the Union ministry of water resources is learnt to have called for a report from Polavaram Project Authority (PPA), which monitors the execution of project, on why the state government had called for fresh tenders for the project overruling the objections of the Centre.
“The PPA will be submitting a report to the government within a week,” an official familiar with the development said.
In June, chief minister Reddy had ordered a probe into the alleged corrupt deals with various companies, including power producers signed by Naidu.
Less than a month later, the Centre raised its objection to review power purchase agreements made during the Telugu Desam Party’s regime from 2014 to 2019 and said that revisiting the agreements would halt the flow of foreign investments in the power sector.