Amaravati: The Andhra Pradesh cabinet on Wednesday cancelled the Rs 3,216.11 crore worth Polavaram Hydel Power Project contract and called for new tenders in the reverse tendering process.

Chief Minister Y.S. Jagan Mohan Reddy chaired the meeting that decided to cancel the contract given to Navayuga Engineering Company Limited by the earlier Telugu Desam Party government.

It also decided to recover the advance amount given to Navayuga.

This is the second major contract lost by Navayuga. The government had in August terminated the contract for works relating to the Polavaram Irrigation Project valued around Rs 3,000 crore.

Both the contracts were awarded by the TDP government.

The Centre is funding the Rs 58,000 crore Polavaram project being built across the Godavari river. It was declared a national project under the Andhra Pradesh Reorganisation Act, 2014.

The Jagan cabinet also withdrew approval of 412.5 acres of land allotted to Machilipatnam Port Private Limited (MPPL) as the company neither started the work nor paid the rent for the land given.

Navayuga is the lead promoter in MPPL.

In February, the then Chief Minister N. Chandrababu Naidu had laid the foundation stone for the deep seaport to be constructed at an estimated cost of Rs 12,000 crore.

The Jagan cabinet also approved the extension of the ban on Maoists for another year, besides approving increase of salaries of ASHA workers from Rs 3,000 to Rs 10,000.