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   Chinese connection that has gone off the rails

Railway Minister Dulles Alahapperuma blows the
whistle for some newly aquired carriages
to begin their maiden journey

Deal goes to Bribery Commission

Unsolicited offers entertained because
'Chinese is cheap'

Dulles accused of supporting
deviation of procedure

By Nirmala Kannangara

The procedure followed by the railway authorities to purchase engines and carriages to meet urgent railway needs has come into question with one Chinese bidder's credentials being referred to the Permanent Commission Investigating into Allegations of Bribery and Corruption for inquiry.

With railway enthusiasts questioning the prudence in approving the purchase of three brand new locomotives on behalf of Ceylon Petroleum Storage Terminals Limited (CPSTL), letters of protest have been sent to Presidential Secretary Lalith Weeratunga, Finance Secretary, Dr. P. B. Jayasundera, the CID and the General Manager, Sri Lanka Railways, Dr. Lalithsiri Gunaruwan stating that the entire Chinese connection was questionable and that Minister of Transport Dulles Alahapperuma should not have supported deviation of procedure.

What is worse is that the Ministry of Transport does admit to being financially constrained to such an extent that the policy now is to go Chinese, for they come cheap!

According to the Ministry Secretary Nihal Somaweera, the Sri Lanka Railways (SLR) does not have the option of going for open tenders and has to make do with unsolicited offers which prevents opportunities for any price comparison with  manufacturers of other low priced carriages or locomotives.

"The European products are the best quality in the market but since they cost more, SLR always goes for Chinese carriages and locomotives. Hence we do not get a chance for price comparison but only could negotiate the prices," was what he said.

Railway carriages

The procurement of three railway carriages on behalf of the Ceylon Petroleum Corporation (CPC) by SLR came up in September this year.

The cited reason was that due to the shortage of engines, the transportation of fuel was getting hampered and this required the Ceylon Petroleum Corporation (CPC) and the Ceylon Petroleum Terminals Limited (CPSTL) to submit bids to the Sri Lanka Railways (SLR) with regard to purchasing three diesel units. These engines are to be used for fuel transport and bids have been made by four companies with the CPSTL ready to enter into an agreement with one of them, the China National Machinery Import and Export Corporation.

It is in this backdrop that a Cabinet Paper submitted by Dulles Alahapperuma has come to the fore. In his Cabinet Paper dated October 17, 2007, Alahapperuma had stated that due to the dearth of railway engines, the transport of fuel by train began to decline gradually which has continued in that manner for a considerable period. The Petroleum Corporation which took this situation into consideration, realising that there is no other alternative to solve this problem, has taken steps to purchase railway engines through the Institute of Petroleum Stores Terminal Limited and having the engines handed over to the Department of Railways to reconsolidate fuel transport.

Accordingly, the Institute of Ceylon Petroleum Stores Terminal Limited with the function of a committee of technology consisting of officers of the Department of Railways has called for universal open tenders for the purpose of purchasing three railway engines. At this instance the following suppliers have submitted their quotations respectively:

China National Machinery Import and Export Co-operation US $ 1,251,328.50

Rights India US $ 2,678,958.00

United Tractor and Equipment US $ 1,612,413.43

C. S.R. Kiushuwan Locomotive and Rolling Stock Work US $ 1,553,320.00

According to the Cabinet Paper, the Appraising Committee of Technology has recommended the purchase of these engines at the price submitted by the China National Machinery Import and Export Corporation because of the technological feasibility and the low price.

Procedure involved

Alahapperuma's Cabinet Paper further explains that the Institute of CPSTL has to enter into a number of agreements with the Department of Railways when fuel is being transported with the help of railway engines.

It adds that among these agreements are agreements pertaining to the maintenance of engines, agreements with regard to the responsibility of proper maintenance and if any laxity occurs in the supply of engines, agreements to compensate for such lapses as well as agreements pertaining to fuel transport rates.

"I am of opinion that the possession of power by state in deciding fares for the transportation of fuel as well as making amendments is not fair to be restricted by an agreement. Likewise, the Department of Railways too has no power to enter into an agreement with the CPSTL Institute, which results in the restriction of power to take decisions by the state; in order to minimise these complications, an alternate methodology should be followed," adds Alahapperuma.

In the proposal, it is said that as the above four quotations have been obtained from the open market according to tender procedure and assessed by a Technical Evaluation Committee (TEC) comprising engineers of the Department of Railways it has been decided the engines are suitable.

Deviation of procedure

It is further stated that it was thus decided not to invite quotations through a tender procedure once again and to utilise the quotation invited by the CPSTL and to make use of the prices quoted by the four suppliers to commensurate with provisions already made.

"I propose to appoint a board consisting of a representative of the Ministry of Transport, General Manager of Railways and a representative of the Treasury to submit suitable recommendations to the Cabinet of Ministers to purchase three engines to the Department of Railways," read the Cabinet Paper seeking approval on October 17 for the purchase of the above three engines.

It is in this backdrop that the bidders have come under fire with the China National Machinery Import & Export Corporation being viewed as a front for a bogus company named Changzhous Locomotive and Rolling Stock Co. Ltd.

It is now alleged that some officials of the Sri Lanka Railways have been trying to promote a bid submitted by the company named Changzhou Industry Shunting Locomotive Factory, which is allegedly functioning with an alternative name, Changhzou Locomotive & Rolling Stock Company.

While this is  so, senior railways official now claim that there is no actual locomotive supplier in China by this name according to the Chinese Ministry of Railways and hence the reference to the Bribery Commission for further action.

It is further alleged that the Changzhou Industry Shunting Locomotive Factory has never produced a main line locomotive in their brief history for the Chinese Railway or any other railway outside China, making matters worse.

Hence is has naturally cast doubts as to why Sri Lanka is in a mad rush to include them among the unsolicited bidders, with the bid documents being processed through the China National Machinery Import and Export Corporation, the company singled out to supply three engines to the SLR as things stand today.

 Suitability requirement overlooked

What is also surprising is that the Technical Evaluation Committee (TEC) has found the bid submitted by the same company to be technically suitable. Railway workers are worried and surprised that the TEC that drafted tender conditions has ignored the most important condition stipulated in evaluating this bid - the past experience of the bidder.

It is known and is the practice that the TEC is expected to give priority to experience not only when purchasing locomotives but even spare parts - a rule not adhered to in this instance, and China National Machinery Import and Export Corporation that does not possess the required experience  has already been considered suitable.

In the meantime, Ministry officials exonerate the TEC claiming that one important criterion, the unit price is decided before the papers are submitted to the TEC!

However, workers allege that the TEC has totally ignored the fact that the bidder has not submitted evidence to prove this aspect of manufacturing and supplying main line locomotives to any railway network, something they should have insisted on.

Trade union alleges corrupt practices

In the meantime, trade unionists allege corrupt practices of a group of senior officials as the reason for successive ministers of transport being misled. They told The Sunday Leader that authorities have been informed about the previous instances of misleading the former minister of railways with regard to the purchase of passenger coaches.

They claim that during the previous minister's tenure too, the department entertained two unsolicited proposals due to the insistence of certain officials. One was from Ubei Machinery Import and Export Corporation, China and the other was from China National Machinery and Export Corporation. Out of the two unsolicited offers the lowest and the most complying offer was from Ubei for US $ 195,000 per carriage while the other was US $ 223,000 which was later upgraded to US $ 227,000 per carriage. The latter proposal prevailed.

What is more, workers allege that the locomotives purchased for the Puttalam Cement Company through the government machinery are functioning below expected standards.

It is in this backdrop that workers, trade unionists and railway enthusiasts collectively call for the appointment of a TEC selected by the National Procurement Agency (NPA) to evaluate offers thereby keeping political and departmental  interference at bay.

Railway and Embassy unavailable

All attempts to contact General Manager Railways Dr. Lalithsiri Gunaruwan to ascertain whether allegations have been levelled against TEC members for misleading Railway Minister Dallas Alahapperuma over the purchase of three brand new locomotives failed. 

The Sunday Leader's attempts to obtain a comment from the Chinese Embassy in Colombo also proved futile.

Allegations untrue - T'port Secretary

Transport Ministry Secretary, Nihal Somaweera ruled out allegations levelled against the Railways TEC members with regard to the Chinese railway engine controversy claiming that they were appointed after prices were finalised.

"Once the SLR negotiates the prices for the purchase of carriages or locomotives it is the Cabinet that decides whether to go ahead with the offers or not. It is after all these procedures that the TEC is appointed and they do not have any hand in these negotiations," claimed Somaweera.

According to Somaweera the SLR does not have an option to go for open tenders and only goes for unsolicited offers where there are no chances for any price comparison with any other low price carriages or locomotives.

"The European products are the best quality in the market but since they cost more, SLR always goes for Chinese carriages and locomotives. Hence we do not get a chance for price comparison but only could negotiate the prices. In that scenario if anybody accuses the members of the TEC of having underhand dealings that is not justifiable. The members are appointed once the prices are negotiated," Somaweera told The Sunday Leader.

"Politicians in dubious deals" - Secretary, ACREGU

The JVP affiliated All Ceylon Railway Employees General Union (ACREGU) accused the politicians of having a direct hand in all railway purchases. Secretary ACREGU, Sumathipala Manawadu told The Sunday Leader that it was not just the TEC members but also the politicians who were responsible for the rampant corruption.

"True there are many corrupt officers at the SLR but still they cannot make a huge difference as nothing would happen without political blessings. This is the normal practice at the Railways. That is also why the administration is not keen to take action against corrupt officials," charged Manawadu.

Manawadu further alleged that soon after the purchase of some power sets from China some months ago, it was reported that the Chinese hosted some high-ranking SLR  officers.

"In many instances, the blame goes to the TEC for making wrong decisions. If they are, they are not alone in this. There have been instances when the government has gone ahead despite strong opposition from the TEC. The then TEC did not approve the M9 power set purchase but still, the government went ahead and the consequences are clearly visible now. Out of the 10 power sets that were purchased seven are out of order now," alleged Manawadu.

"Complaint at inquiry stage" - Neville Guruge

Director Investigations, Commission to Investigate Bribery and Corruption Neville Guruge told The Sunday Leader that a Sri Lanka Railways (SLR) complaint is on the inquiring stage and after the completion of the inquiry it will be forwarded to the Commissioner General of Bribery and Corruption for further action.

"We received a complaint against a specific issue at SLR and after the inquiry, it will be forwarded to the Commissioner General for further action. Finally it will be sent to the legal officer to see what action could be taken against any wrongdoers," claimed Guruge.

"No complaints received" - SSP Nimal Kulatunge

Director CID SSP Nimal Kulatunge told The Sunday Leader that the CID did not receive any complaints against the Sri Lanka Railways (SLR) or CPSTL.

"The CID did not receive any complaints against any SLR official or a contract," said Kulatunge.

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