CHENNAI: Neyveli Lignite Corporation India Ltd (NLCIL), a PSU major under the coal ministry, is under scrutiny for allegedly bypassing standard tendering norms in appointing a project management consultant (PMC), which eventually led to a massive cost overrun of nearly Rs 332 crore.
It appointed a consultant on nomination basis to award an integrated township development project at Talabira in Odisha, a move that has now resulted in a legal tangle with demands for a CBI investigation.
According to internal documents available with TNIE and people familiar with the development, the Rs 192-crore integrated township project was originally designed by NLCIL’s Central Technical Office (CTO), as is the practice since the inception of the company, as part of a broader EPC (engineering, procurement, and construction) package linked to a thermal power project.
The plan covered 642 houses for employees, accommodation for CISF personnel, a mid-sized hospital, and an indoor stadium, and access and approach road to highways.
The township was initially meant to be tendered alongside boiler, turbine, and other EPC work. The bidder, Bharat Heavy Electricals Ltd (BHEL), however, is understood to have requested that certain non-EPC works, including the township, be removed from the scope of work to avoid delays in executing the power project.
Staff allege departure from practice in awarding tender
The NLCIL board subsequently approved the de-scoping of the work. Employees allege that the current management purposefully departed from the established practice by transferring the township project from CTO to the Mines Division which has no experience in this kind of work estimation, and the Mines Division, in turn, appointed HLL Infra Tech Services (HITES) as project management consultant (PMC) hurriedly on a nomination basis, without an open tender procedure. HITES is a public sector undertaking under the Union Health Ministry.
Internal guidelines stipulate that nomination-based awards should be used only in emergencies involving risks to life or property. Critics question why the PMC mandate was handed to HITES in June 2024 when there was no apparent urgency arising from safety, production, or power-generation concerns. HITES floated the tender in March 2025, nine months after receiving the mandate.
The EPC contract for the township was later awarded to Hyderabad-based private company KPC Projects Ltd for Rs 524.5 crore by HITES/NLCIL— a value employees describe as “exorbitant” compared with the original internal estimate — despite other government entities such as NBCC, EIL, HUDCO and HSCL being available.
In fact, the revised tender has seen a reduction in the scope of the project — it only accounts for 300 houses, an open-air stadium, and a smaller hospital. This is way below what was earlier prescribed. The revised tender also removed the approach road and CISF quarters from the project’s scope.
Sources claimed that officials of NLCIL and HITES have “misused their positions”. However, TNIE could not independently verify these accusations. No FIR has been registered so far.
“As the subject issues raised seeking clarification/reply are sub judice, we cannot offer any comments at this stage,” an NLC spokesperson told TNIE.
