The Neyveli Lignite Corporation of India Limited (NLCIL) has reportedly overridden internal objections to raise the tender value of a major rehabilitation housing project in Jharsuguda, Odisha, by Rs 337.8 million, allegedly in breach of its own contract rules, according to sources.

The cost escalation relates to the construction of 537 houses, along with roads, water supply systems, and community facilities for families displaced by NLCIL’s Talabira Thermal Power Project in Hirma village.

Originally, NLCIL awarded the contract to RSB Projects in December 2022 for Rs 1.38 billion, with a completion deadline of 12 July 2024. However, on 24 April 2025, the General Manager (Civil) of NLCIL issued a letter approving a 24.48 per cent increase in the project value, raising it to Rs 1.72 billion, even though significant portions of the work remained unfinished.

Rate revisions and internal dissent

According to the letter, the escalation covered:

An 18.47 per cent increase for balance works across four housing blocks (A, B, C and K) completed beyond the original deadline.

A 23.47 per cent hike for constructing the remaining 216 houses.

The approval cited clearance from a sub-committee of directors, which had endorsed the rate revisions.

However, internal correspondence reviewed by sources revealed that the Chief General Manager (Civil) at NLCIL’s Central Technical Office had strongly objected to any cost escalation. In an email dated 16 July 2024, addressed to the Executive Director of the Talabira Project, the CGM stated that rate increases were not permissible under the signed contract.

The officer cited three contract clauses that made the quoted rates firm and fixed for the entire duration of the agreement. The same email also referenced an earlier pre-bid meeting where bidders had requested a price variation clause, which NLCIL had expressly declined, confirming that no escalation would be allowed.

Despite these provisions, the tender value was revised upwards by over Rs 330 million, with insiders suggesting that the sub-committee’s approval bypassed standard technical evaluation procedures.

Delays and transparency concerns

The Talabira rehabilitation project, intended to house displaced families, has already faced multiple delays, and the latest cost escalation has raised concerns about procedural integrity and internal accountability within the public sector enterprise.

Industry observers note that such deviations from established contract norms could invite regulatory scrutiny and calls for an internal audit, especially given the project’s public significance and funding.