Chennai, Oct 30:
The Tamil Nadu government has cancelled a second short-term electricity procurement tender within three days after suppliers quoted rates of up to Rs 35 per unit, with the State deciding against proceeding with purchases considered financially unviable.
Electricity Resources and Law Minister R Nirmalkumar announced the decision on Thursday, stating that the Tamil Nadu Power Distribution Corporation Ltd (TNPDCL) would reject the bids because the prices quoted were not feasible.
“Another short-term tender for peak hours opened today. Because the price quoted is not feasible, we are rejecting the bid, and this tender will be cancelled,” the Minister said in a post on X.
The latest tender, floated on October 22, sought electricity to meet round-the-clock and peak-hour requirements between November 2026 and January 2027. The quoted rates ranged from Rs 8.50 to Rs 35 per unit, with several offers for peak-hour supply reaching Rs 35.
The decision follows the cancellation of another tender on October 27. That tender was intended to procure 1,000 MW of electricity during evening peak hours, between 6 pm and midnight, from November 2026 to May 2027. Suppliers had quoted rates ranging from Rs 37 to Rs 41.50 per unit.
The latest tender covered both round-the-clock supply and electricity required during morning and evening peak periods. TNPDCL had sought 600 MW of round-the-clock power for November, 300 MW for December and 1,200 MW for January.
However, the offers received fell significantly short of the requirement for round-the-clock supply. Suppliers offered only 40 MW against the 600 MW sought for November, 120 MW against 300 MW for December and 40 MW against 1,200 MW for January.
The offers represented just 6.7% of the requirement for November, 40% for December and 3.3% for January.
The response was relatively stronger for morning peak-hour supply. Against the requirement of 400 MW for November, 200 MW for December and 800 MW for January, suppliers offered 440 MW, 250 MW and 932 MW, respectively.
Evening peak-hour bids covered 480 MW against the 400 MW sought for November and 295 MW against the 200 MW required for December. For January, however, offers amounted to 520 MW against the requirement of 800 MW.
Despite the availability of bids exceeding the required quantities in several periods, the utility decided not to proceed because of the prices quoted. Tender conditions allow TNPDCL to reject offers when the tariffs are not considered aligned with prevailing market conditions.
The consecutive cancellations come amid concerns over Tamil Nadu’s electricity requirements during periods of high demand. Evening peak hours are particularly challenging because solar power generation is unavailable after sunset, while household, commercial and industrial consumption remains high.
The government must now balance the need to secure sufficient electricity against the financial implications of purchasing power at elevated rates. Procuring electricity at expensive tariffs could increase the financial burden on the distribution utility and ultimately affect the overall cost of power supply.
The latest decision also follows criticism from AIADMK general secretary Edappadi K Palaniswami, who questioned the government’s handling of power procurement and alleged that costly purchases could burden taxpayers.
By cancelling the tenders, the government has avoided proceeding with the latest offers at the quoted rates. However, the adequacy of alternative arrangements for meeting demand during the coming months remains an important concern, particularly as TNPDCL continues to plan for round-the-clock and peak-hour requirements.