Adani Group faces setback as Tamil Nadu cancels smart meter tender

Why did Tamil Nadu cancel Adani Group’s smart meter tender?

In a setback for the Adani Group, the Tamil Nadu government, led by the DMK, has scrapped its global tender for the procurement of smart meters. The tender, which was part of the Centre-funded Rs.19,000 crore Revamped Distribution Sector Scheme (RDSS), aimed to install smart meters across the state to improve billing efficiency and reduce technical losses.

Cancellation citing high costs

The Tamil Nadu Generation and Distribution Corporation (Tangedco) cancelled the tender after Adani Energy Solutions Ltd (AESL) emerged as the lowest bidder for one of the four packages covering eight districts, including Chennai, Kancheepuram, and Chengalpattu.

Officials stated that AESL’s quoted prices were “unacceptable despite negotiations to bring down the costs.” Consequently, all four tenders, floated in August 2023, were cancelled for “administrative reasons,” with plans to refloat them soon.

The cancelled package alone involved the proposed installation of over 8.2 million smart meters. Under the DBFOOT (Design, Build, Finance, Own, Operate, Transfer) model, Advanced Metering Infrastructure Service Providers (AMISPs) would install and maintain the meters, while Tangedco would repay costs on a per-meter-per-month basis over 10 years.

Political controversy

The cancellation follows allegations against Adani Group chairman Gautam Adani, his nephew Sagar Adani, and others, who were accused by US prosecutors of bribing Indian officials to secure lucrative solar energy contracts. The Adani Group has denied these allegations.

The DMK’s move has drawn attention within political circles, with speculation that the cancellation may be linked to the accusations surrounding the Adani Group. The Opposition I.N.D.I.A bloc, including Congress, has used the developments to escalate attacks on the Adani Group.

Chief Minister M K Stalin denied any association with Gautam Adani, challenging NDA parties to support a Joint Parliamentary Committee (JPC) probe into the Adani Group’s operations. “Neither Adani met me nor I met him,” Stalin said, asserting that Tamil Nadu’s electricity board has agreements with public-sector entities like the Solar Energy Corporation of India (SECI) for solar power, not with the Adani Group.

Smart meter initiative in Tamil Nadu

A pilot project in Chennai’s T Nagar in 2018 deployed 1.1 lakh smart meters under the Smart City initiative, paving the way for state-wide implementation. Tamil Nadu leads the RDSS initiative with a sanctioned plan for over 30 million smart meters.

The installation of these meters is expected to reduce aggregate technical and commercial losses from 16% to 10% and enhance tariff planning. However, Tangedco officials noted that AESL’s bid for Tamil Nadu was significantly higher than the Rs.120 per meter per month quoted in other states like Maharashtra and Bihar.

Future prospects

Despite the cancellation, Tamil Nadu remains committed to the smart meter initiative and plans to reissue the tenders soon. The government aims to strike a balance between cost-effectiveness and the goal of modernizing the state’s electricity infrastructure.

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