The Kerala State Electricity Board (KSEB) has terminated its contract with a consortium of Indian and Chinese firms after prolonged delays in completing electromechanical works for the 24 megawatt (MW) Bhoothathankettu small hydroelectric project.

The KSEB board approved the cancellation of all agreements, including a tripartite contract signed with Sree Saravana Engineering Bhavani Ltd. (SSEB), Tamil Nadu, and Hunan Zhaoyang Generation Equipment Company Ltd., China. The decision follows an extended dispute concerning the final consignment of equipment from China.

Based on recommendations from the National Hydro Power Corporation (NHPC), the KSEB will now seek new bids for supplying the remaining equipment, either from Chinese manufacturers or alternate sources. If these efforts do not succeed, the utility may consider dismantling existing machinery and re-tendering for fresh installations.

The original Rs 818 million contract was signed in March 2015 with a planned completion timeline of 18 months. Despite multiple deadline extensions, the latest target of 31 March 2023 was also missed. As per officials, around 86.61 per cent of the work has been completed so far.

While two shipments from China were received, the third consignment was delayed due to contractual disagreements. In 2024, the Chinese partner informed KSEB that the equipment had been sold to another Chinese company, ChangSha XingYue Electrical and Mechanical Equipment Co. Ltd. Attempts to resolve the issue through further discussions were unsuccessful, and KSEB cited significant lapses by SSEB as the primary reason for the project's delay.

To date, KSEB has spent approximately Rs 1.69 billion on civil and electromechanical work for the project, which remains non-operational, generating neither interest nor electricity. The utility noted that the delay has broader implications for Kerala’s power sector and warrants public concern.

The Bhoothathankettu project, located in Kothamangalam, is a run-of-the-river hydroelectric scheme utilising the storage reservoir of the Periyar Valley Irrigation Project.