Chennai water board cancels BGR Energy’s ₹440 Crore contract

24 Sep 2024 , 03:03 PM

BGR Energy Systems Ltd announced on Monday (September 23) that it has received a contract termination notice from the Chennai Metropolitan Water Supply and Sewage Board (CMWSSB) for a 45 MLD capacity tertiary treatment reverse osmosis (TTRO) plant in Kodungaiyur.

The ₹440 Crore project included constructing and operating a TTRO facility and establishing DI transmission mains to supply treated water to industries in Chennai’s Manali neighbourhood.

On January 4, 2017, BGR Energy was awarded a contract of ₹235 Crore for construction and ₹205 Crore for 15 years of facility operation and management.

However, owing to delays in project development and concerns about the quality of RO-treated water, the CMWSSB issued a termination letter on September 18, 2024, which BGR Energy received on September 23.

The termination of this contract is projected to have an impact on BGR Energy’s financials by reducing turnover and earnings from the remaining unexecuted section of the project. Despite the setback, the corporation maintained that it would have no significant impact on its overall operations, financial health, or other activities.

Contract termination has a negative influence on turnover and proportionate profit due to the number of pending contracts to be executed. There is no other major impact on the company’s finances, operations, or other activities, according to the company’s statement.

Following this development, the company’s counter slipped as much as 2% to an intraday low of ₹50.34.

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