Setback for BGR Energy as Chennai water board cancels ₹440-crore contract
BGR Energy Systems Ltd on Monday (September 23) said it has received a notice of contract termination from the Chennai Metropolitan Water Supply and Sewage Board (CMWSSB) regarding the design, build, and operate (DBO) project for a 45 MLD capacity tertiary treatment reverse osmosis (TTRO) plant in Kodungaiyur.
The project, valued at ₹440 crore, involved the construction and operation of the TTRO plant and the laying of DI transmission mains to supply treated water to industries in the Manali area of Chennai.
“…this is to inform that the company has received intimation of termination of contract from Chennai Metropolitan Water Supply and Sewage Board with respect to Design, Build and Operate for 15 years (DBO) of 45 MLD capacity Tertiary Treatment Reverse Osmosis (TTRO) at Kodungaiyur including supply, laying DI transmission mains for conveyance of product water to various industries in Manali Area, Chennai,” according to a stock exchange filing.
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The contract was awarded to BGR Energy on January 4, 2017, with a value of ₹235 crore allocated for the construction phase and ₹205 crore for 15 years of operation and management of the facility.
However, due to delays in project execution and concerns over the quality of the RO-treated water, the CMWSSB issued a termination letter on September 18, 2024, which was received by BGR Energy on September 23.
The termination of this contract is expected to impact BGR Energy’s financials through a reduction in turnover and profits from the remaining unexecuted portion of the project. Despite this setback, the company stated that there would be no material impact on its overall operations, financial health, or other activities.
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“The impact of the termination of the contract is a reduction in turnover and reduction in proportionate profit to the extent of pending contracts to be executed. There is no other material impact on the financials and operations or other activities of the company,” it said.
Shares of BGR Energy Systems Ltd ended at ₹51.31, up by ₹1, or 1.99%, on the BSE.
(Edited by : Shoma Bhattacharjee)
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