NLCIL Faces Scrutiny Over Rs 3.32 Billion Project Cost Overrun

07 Nov 2025 CW Team

The Rs 1.92 billion township project, part of a broader engineering, procurement and construction (EPC) package linked to a thermal power plant, was originally designed by NLCIL’s Central Technical Office (CTO) — in line with the company’s long-standing practice. The plan included 642 employee houses, CISF accommodation, a hospital, an indoor stadium, and road connectivity to nearby highways.

However, after Bharat Heavy Electricals Ltd (BHEL), the EPC bidder, requested that non-EPC elements such as the township be excluded from its scope to avoid project delays, the NLCIL board approved the de-scoping.

Subsequently, employees allege that the township project was transferred from the CTO to the Mines Division, which lacked experience in township projects. The Mines Division then appointed HLL Infra Tech Services (HITES) — a PSU under the Union Health Ministry — as PMC on a nomination basis, without a competitive tender process.

According to internal guidelines, nomination-based awards are permitted only in emergency situations involving risk to life or property. Critics question why HITES was appointed in June 2024, when no such urgency existed, particularly as the tender was only floated nine months later, in March 2025.

The EPC contract was eventually awarded to Hyderabad-based KPC Projects Ltd for Rs 5.25 billion by HITES/NLCIL — a cost described by employees as “exorbitant” compared with the original internal estimate, especially given the reduced project scope.

The revised plan now includes only 300 houses, a smaller hospital, and an open-air stadium, with the approach road and CISF quarters removed from the design. Employees allege that this significant reduction in scope, combined with a sharp cost escalation, reflects procedural lapses and potential misuse of authority by officials at both NLCIL and HITES.

Sources have called for a CBI investigation, though no FIR has yet been filed.

When contacted, an NLCIL spokesperson said, “As the issues raised are sub judice, we cannot offer any comments at this stage.”

The controversy has drawn attention to the company’s adherence to procurement norms, with observers urging greater transparency and accountability in public-sector infrastructure projects.

Neyveli Lignite Corporation India Ltd (NLCIL), a public sector enterprise under the Ministry of Coal, is under scrutiny for allegedly bypassing standard tendering procedures in appointing a project management consultant (PMC) for its integrated township project at Talabira, Odisha, resulting in a cost overrun of nearly Rs 3.32 billion. The Rs 1.92 billion township project, part of a broader engineering, procurement and construction (EPC) package linked to a thermal power plant, was originally designed by NLCIL’s Central Technical Office (CTO) — in line with the company’s long-standing practice. The plan included 642 employee houses, CISF accommodation, a hospital, an indoor stadium, and road connectivity to nearby highways. However, after Bharat Heavy Electricals Ltd (BHEL), the EPC bidder, requested that non-EPC elements such as the township be excluded from its scope to avoid project delays, the NLCIL board approved the de-scoping. Subsequently, employees allege that the township project was transferred from the CTO to the Mines Division, which lacked experience in township projects. The Mines Division then appointed HLL Infra Tech Services (HITES) — a PSU under the Union Health Ministry — as PMC on a nomination basis, without a competitive tender process. According to internal guidelines, nomination-based awards are permitted only in emergency situations involving risk to life or property. Critics question why HITES was appointed in June 2024, when no such urgency existed, particularly as the tender was only floated nine months later, in March 2025. The EPC contract was eventually awarded to Hyderabad-based KPC Projects Ltd for Rs 5.25 billion by HITES/NLCIL — a cost described by employees as “exorbitant” compared with the original internal estimate, especially given the reduced project scope. The revised plan now includes only 300 houses, a smaller hospital, and an open-air stadium, with the approach road and CISF quarters removed from the design. Employees allege that this significant reduction in scope, combined with a sharp cost escalation, reflects procedural lapses and potential misuse of authority by officials at both NLCIL and HITES. Sources have called for a CBI investigation, though no FIR has yet been filed. When contacted, an NLCIL spokesperson said, “As the issues raised are sub judice, we cannot offer any comments at this stage.” The controversy has drawn attention to the company’s adherence to procurement norms, with observers urging greater transparency and accountability in public-sector infrastructure projects.

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