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World Affairs








Water Board's purification of a dubious supplier

Mihin: Chamal's to fly, yet ours not to reason why

(Inset) Minister Chamal Rajapakse

By Sonali Samarasinghe 

Only Transavia, the company making a handsome profit at public expense from an aircraft wet leased to Mihin Lanka would be facetious enough to congratulate Aviation Minister and Presidential elder brother Chamal Rajapakse on his success in resurrecting the budget airline.

On new year's day Mihin's much troubled aircraft finally flew on its inaugural flight to Dubai amidst allegations the trip was an all expenses paid journey as there were hardly any revenue yielding passengers. An allegation hotly denied by another Mihin official.

However 2009 did not bode well for the budget airline. On its second flight on Friday (2) it had sold only 60 outbound tickets, all one way and just 10 inbound from Dubai back to Colombo.

Some Mihin officials are livid stating no proper promotional programme has been undertaken by its commercial department resulting in poor ticket sales. These officials are paid colossal salaries each month courtesy the public, industry sources say pointing out that Mihin would crash dismally in such a scenario.

Earlier on December 20, just 12 days before Chamal and his officials promised to re launch Mihin for the umpteenth time on January 1, 2009, it was not five golden rings and a partridge in a pear tree that Chamal Rajapakse was to receive, but a very encouraging email promising - reading from left to right - one passenger aircraft in exchange for a goodish bit of public money with the enticing subject line, 'Yours To Fly'.

Failure to launch

Recall that Chamal promised to launch Mihin many times in the last two months. (Please see past copies of The Sunday Leader) 

But amidst allegations of clashes within the Mihin management itself as Chairman Raja Edirisuriya and CEO Kapila Chandrasena locked horns in a battle for supremacy the airline could not seem to find either the aircraft or the passengers to fly as it struggled to get its act together.

Funnily enough Edirisuriya comes highly recommended by Gotabaya Rajapakse as the duo knew each other from their days in the US of A, while Chandrasena is a close buddy of Chamal Rajapakse's son Sasheendra. Whatever the connections to the Rajapakses the two don't seem to hit it off as allegations and counter allegations are hurled of sabotage by each camp.

Second aircraft

While Mihin sources say there are moves to get down a second  aircraft at public expense in three months to fly the Indian routes to Trichy and Trivandrum the negotiations remain sketchy even as Edirisuriya loyalists claim some at Mihin are moving to oust him from his post as chairman.

Edirisuriya however could not be contacted as he had left to the USA.

Meanwhile SriLankan Airlines is shutting down four of its Indian destinations at the end of the winter schedule end March. But it is unlikely Mihin could derive any benefit from this either.

Be that as it may Iranjan Carson Gajasinghe, local agent for Transavia, a subsidiary of KLM and Air France, was to send an email on December 20 to the Aviation Minister. (See box for full text of email.)

'Yours to Fly'

As if it were a new year's gift of exceptional value, Gajasinghe bequeaths the aircraft to Chamal stating 'Yours to Fly.' A play no doubt on the budget airline's own logo and slogan. It certainly may be Chamal's to fly but it's the public of Sri Lanka that continue to pay dearly as the government lavishes itself with goodies and the economy plummets.

"Dear Sir, First of all we would like to congratulate on your success in resurrecting Mihin Lanka and guiding them to launch this fine product in our beautiful paradise. Aircraft is ready for delivery to Colombo and it is 'Yours to fly'," Gajasinghe writes. Adding for good measure that he has attached some photographs of the aircraft with Mihin livery.

Blessed or cursed?

Gajasinghe ends on a spiritual note calling upon the Triple Gem to bless the eldest Presidential sibling. Meanwhile it is left to be seen who will bless the rest of this country that is being taken down the financial drain by the Rajapakse foursome.

While Mihin's relaunching dates themselves were chaotic in that Minister Chamal had first promised cabinet it would be done on December 15, 2008 then postponed it for December 21 ostensibly due to bitter rivalry between Chairman Edirisuriya and CEO Chandrasena.

Following frantic shuttling to India by Chairman Raja Edirisuriya to which Mihin had neither overflying nor landing rights (Please see past copies of The Sunday Leader) the airline's coordinator Gamini Abeywardena confirmed the airline had run a proving flight on December 30 to Trivandrum where Civil Aviation officials were on board.

No operational manual yet

Shockingly however sources at Mihin claim that the aircraft specific operational manual has yet to be submitted to the Civil Aviation Authority without which the CAA is unable to grant an operational license.

Mihin sources claim that a license was obtained on some hurriedly put together documentation with a promise of the CAA later being handed a more comprehensive operational manual.

While this seems to be the ad hoc and cavalier level of management that now prevails at the budget airline - an airline which has as its sole responsibility the lives of its passengers - those in charge either ducked questions or were conveniently not available.

Running scared

Director General Civil Aviation, Parakrama Dissanayake was constantly 'at a meeting.' Media coordinator for Mihin Lanka Gamini Abeywardena the man who should have known the answer to many of our questions declined to comment on the status of the operational manual and referred us to the Acting Chairman and CEO, Kapila Chandrasena. The CEO was constantly engaged or at the Ministry and not available.

Dubai flight

Nonetheless the inaugural flight to Dubai did take place at 6 pm on January 1, 2009 with some 143 passengers. Sources allege that the flight was a mere turn around flight which carried no revenue yielding passengers but guests of Mihin given an all expenses paid about turn trip as they were served with samosas, cake, coffee and apple juice. 

Upon arrival at the Dubai Airport a 20 minute ceremony was held at the airport lounge and that was that. The return flight to Colombo carried about 80 passengers.

Mihin's Media Coordinator Gamini Abeywardena, however denied the allegations it was an all expenses paid trip and told The Sunday Leader there were 143 revenue yielding passengers on the Colombo Dubai flight but could not confirm the number on the return flight. Abeywardena also confirmed that a one way ticket cost Rs 22,250 while a return air ticket to Dubai cost Rs. 48,460.

Other sources told The Sunday Leader about seven Mihin officials were on the flight while one of its Directors, Chandana Liyanapatabendi had also been accompanied by his family.

Bad news for Mihin

But there's bad news for Mihin. Industry sources say to operate the flight even to break even would take some doing. Fuel charges alone would come to about USD 780 per hour. If the aircraft operates three flights a day which would be a bare minimum to cover the costs of the lease itself the burn rate would be about USD 10,920 at 18 hours a day into 30 which is about USD 400,000 for fuel alone.

Other components added would work out to USD 700,000 they claim. This is excluding salaries, head office costs and other ancillaries.

The grand total inclusive of wet lease payment would come to about USD 1.7 million which means Mihin should earn about 2.5 million dollars and enjoy a passenger rate of about 95% to break even.

If this is the case then a one way ticket at Rs. 22,250 just won't help the airline. Industry sources say Mihin would have to sell a one way ticket to Dubai at about Rs. 35,000 which is then close to the price of a ticket sold by SriLankan Airlines and defeats the purpose of a budget airline and Mihin becomes uncompetitive in the market. 

Planned loss absurd for a govt.

Sources also say that while a private company may take a planned loss in its first year of operations it is unconscionable for a government and specially one burdening the people to such an extent it flouts judicial orders and passes war heavy budgets that incorporate allocations for silly little toy projects of the Rajapakse family, to do so. 

The Ceylon Petroleum Corporation may be on the verge of collapse burdened by massive debt through corrupt hedging deals and bad debt not least of which is a colossal Rs 640 million owed to the CPC by Mihin, even though the public get only a discount of Rs. 2 on petrol, but the white elephant traversed the sky to Dubai on its only aircraft wet leased through the blood, sweat and tears of an unwilling public.

President Percy's pet project

Already the public has doled out hundreds of millions of rupees to President Percy's pet project. The company still owes Bank of Ceylon over Rs. 1 billion, the CPC over Rs. 640 million and SriLankan Airlines over Rs. 500 million.

Despite Chamal Rajapakse's extravagance in taking on a further debt of US$ 1 million per month for three months to wet lease one aircraft, Mihin the government knows only too well is already fraught with US$ 3 million in debt with a loss of over US$ 1.5 million from its only year of operation.

It was in November that Aviation Minister Chamal Rajapakse submitted the Cabinet Paper No.2008/50 to wet lease an aircraft through Transavia. The Cabinet Paper itself contained many misleading claims and factual flaws which this newspaper revealed in a series of articles in November and December last year. 

The Cabinet Paper it will be recalled sought to use Rs. 1,100 million out of the unutilised funds from the 2008 budgetary allocation of the Ministry of Ports and Aviation to relaunch Mihin by December 15 or to alternatively borrow this sum from Airport & Aviation Services Ltd. with an agreement to pay back these funds when the financial allocation would be received from the National Budget for 2009.

Budget allocations

President Percy it will be remembered allocated Rs. 6 billion in public funds to his most useless projects, Mihin Lanka and the Weerawila Airport while the economy keeps hurtling further into an abyss.

The Rs. 3 million lease price for the 186 seater Boeing 737-800 per day however does not include the landing fees for the airports nor the several other expenses of operating an airline. The total cost of the lease for a three month period would therefore be about Rs 300 million, even though the November 11, 2008 Cabinet Paper sought approval and in fact obtained approval for Rs 1.1 billion to re launch and stabilize the budget airline.

Chaos at Mihin

Be that as it may even though Mihin now intends to commence flights to Trichy and Trivandrum, landing rights to India have still to be cleared. Recall (see past two weeks' copies of this newspaper) that the Indian Civil Aviation Authority had received two different flight schedules, one sent by the Mihin Chairman and another mischievously sent purportedly by his enemies within the company thus wreaking havoc in the minds of confused Indian officials. 

Yesterday another Director of Mihin, Lal Thalgaswatta was to fly to India to clarify matters and obtain landing rights documentation.

Earlier Mihin was denied over-flying rights due to non payment of several dues under international aviation laws and regulations. However Mihin sources claimed that these dues have now been paid.

Heralding the new year Rajapakse style

As the Rajapakses go merrily on consider only this. Some of us in Colombo may have heralded the new year to sounds of Auld Lang Syne but many Sri Lankans merely buried their dead.

President Mahinda Rajapakse when confronted with elderly women complaining their sons have no jobs immediately points them towards the nearest army camp. Plenty of vacancies at the war front he tells the desperate mothers. No room to dream of architecture and medicine, gardening and interior design for the young village lads. Just a short spell of life or death in the trenches.

Yes. Well into 2009 Sri Lankans will continue to bury their dead and they will do so on an empty stomach. And it is even as the public deriving little benefit from judicial orders, as a government of impunity rolls along on the wheels of hate and fear, sit around the kitchen table wondering what to do next, that Rajapakse's most shameless excess - Mihin Lanka flies again.

"Yours to fly"

From: Iranjan Gajasinghe [mailto:  iranjangajasinghe @yahoo.de]

Sent: Saturday, December 20, 2008 2:51 AM

To: Hon. Chamal Rajapaksa

Cc: Withnage G. S; Thosapala Hewage; Raja Edirisuriya; Raja Edirisuriya; Bandara-Anura ATC; Lal Talgaswatte; Robert Czyrt; Gamini PA- Chairman MJ

Subject: Yours to fly

Hon. Minister Chamal Rajapaksa, Minister of Ports & Aviation, Colombo 1, Sri Lanka

Dear Sir,First of all we would like to congratulate on your success in resurrecting Mihin Lanka and guiding them to launch this fine product in our beautiful paradise. Aircraft is ready for delivery to Colombo and it is "Yours to fly."

Attached please find some photographs with Mihin Lanka livery.

May The Triple Gem Bless You All.

Yours sincerely,

(AJ) Iranjan Carson Gajasinghe Jr.

Aircraft Lease Administrator - Transavia (Subsidiary of KLM-Air France)

Dsseldorf International Airport D-40474 Dsseldorf, Germany


Water Board's purification of a dubious supplier

Water Supply Minister A.L.M. Athaullah

By Dilrukshi Handunnetti

A supplying company that allegedly offered a forged bank guarantee while contracting with the National Water Supply and Drainage Board (NWSDB) and now referred to the National Procurement Agency (NPA) for fraud and contractual violations has once again bid for a similar NWSDB tender despite heightened controversy over its qualifications to bid.

Asha Lanka Enterprises (Pvt) Ltd, a supplier that secured a NWSDB tender to supply aluminum sulphate for water purification at a cost of Rs. 24,550,000 as the second lowest bidder has allegedly submitted forged bank guarantees to the NWSDB - but the blacklisting of this company, despite being requested is yet to be made official.

While the NWSDB officials have gone public with the fact that the bank guarantees were indeed forged, the doors are still kept open allowing the same company to once more submit its bidding documents for a second tender, this time around to supply 1500 MT of aluminum sulphate to the value of Rs. 9,900,000 (US$ 430,000). 

Let's go back to the initial tender secured by Asha Lanka Enterprises (Pvt) Ltd. in August 2008. Seven companies bid for the initial tender to supply 500 MT of aluminum sulphate and the tender results were announced on August 29, 2008. The results included Patno Construction's offer of Rs. 22,550,000, Cee Green Engineering (Pvt) Ltd (Rs.25, 750,000), Dowell International (Pvt) Ltd (Rs. 26,722,500), Engineering Services Ltd (Rs. 28,475,000), Rodesha Enterprises (Rs. 29,102,300) and Natco Pacific Pte (Rs. 29,375,000).

Second lowest bidder

The tender was awarded to Asha Lanka Enterprises (Pvt) Ltd, the second lowest bidder.

Subsequent to the awarding of the tender, on September 22, General Manager, NWSDB, K. L. L. Premanath wrote to the selected company informing of the decision.

The letter stated that the tender offer of Rs. 24,925,000 has been accepted and required a performance bond to be submitted in the prescribed form from a recognised bank of an amount of 10% of the total contract price valid for a period of four and a half months, to be submitted within 14 days from the date of awarding the tender.

Consequently, Chairman, NWSDB received a performance guarantee dated October 6, 2008 bearing No: 17/KOL/GTN/289 for Rs. 2,492,500 issued on behalf of Asha Lanka Enterprises (Pvt) Ltd.

Performance guarantee

The letter acknowledged that a performance guarantee was required as per contractual conditions which the bank was happy to offer and undertook in writing to pay in total an amount of Rs. 2,492,500 upon receipt of the first demand in writing accompanied by a written statement stating that the contractor is in breach of its obligation(s) under the contract, without the NWSDB needing to prove or to show grounds for the demand such sums specified.

However, the letter stated that the performance guarantee would indeed expire by February 28, 2009 and any demand for payments under it must be received by the bank on or before the specified date.

Accordingly, the National Water Supply and Drainage Board (NWSDB) signed a contract with Asha Enterprises Pvt. Ltd., on October 7, 2008 to supply and deliver 500 Mt of aluminum sulphate.

It was thus agreed to complete the work described or referred to in the Bill of Quantities to the entire satisfaction of the engineer and to have the first consignment delivered on or before November 7, 2008 and the second consignment by December 8, 2008.

Performance guarantee

It was further agreed in writing that the contractor would be paid Rs.24, 925,000 plus applicable VAT for the execution of the said work and required as security for the due and proper performance and fulfillment of the contract, a performance guarantee in an amount of 10% of the contract price in favour of the Board from a bank approved by the engineer, as surety amounting to Rs. 2,492,500.

The contract was signed by Chairman, NWSDB, S. C. Amarasinghe and Vice Chairman, NWSDB, Dr. A Uthumalebbe on October 7, 2008 at the Ratmalana office. On behalf of the fraudulent company, A. A. M. Rinthas signed the papers in the capacity of director, Asha Lanka Enterprises (Pvt) Ltd.

It was made to believe, at the time of signing the contract that the performance guarantee was already issued by the bank, as it bore the date of October 6, 2008 and had every sign and symbol of being an authentic bank guarantee at the time of contracting.

Further to that, another letter was also issued under the letterhead of Commercial Bank, addressed to the Chairman of the NWSDB.

Advance payments guarantee

Dated October 30, the Commercial Bank, Kollupitiya Branch wrote to Chairman, National Water Supply and Drainage Board this time regarding the advance payments guarantee No: 19/KOL/GTN/301 for Rs. 4,985,000 issued on behalf of Asha Lanka Enterprises (Private) Limited.

The letter referred to the contract (No: AGM/SUP/CHEM/ALS/2008/08) entered into by the said company on September 22, 2008 for the supply and delivery of 500MT aluminum sulphate to the NWSDB, Ratmalana.

The letter added that it was understood by the Bank that according to the conditions of the contract, an advance payment guarantee was required and yet again offered an irrevocable undertaking to pay Rs. 4,985,000 upon the receipt of the first demand in writing accompanied by a written statement stating that the contractor is in breach of its obligation(s) under the contract.

The letter further informed that the said guarantee expired on February 28, 2009 and stipulated that any demand for payment under this guarantee should be received by the Bank on or before the said date.

It is in the meantime that the truth surfaced that the bank guarantees were nothing but forgeries that caused undue embarrassment to reputed banks besides being an attempt to take the NWSDB for a complete ride.

Cancelled the bid

At this point, the NWSDB Ratmalana quickly took steps to bring the matter to the notice of the authorities and disqualified the said company and cancelled the bid.

The NWSDB promptly informed the National Procurement Agency (NPA) as stipulated and through that the Criminal Investigations Department (CID) to ensure a speedy probe and put an end to the duplicitous company's wheeler dealing. What is more, even the Fraud Bureau had been alerted with regard to the forgery. But these facts have been skillfully hidden, as it now transpires. 

On August 6, 2008 the National Water Supply and Drainage Board (NWSDB) called for tenders for the supply and delivery of 1500 MTs of aluminum sulphate.

The newspaper notice specified that the Chairman, Ministry Procurement Committee, Ministry of Water Supply and Drainage would receive bids for the same and close such on September 11, 2008 at 10 am.

The delivery of the tender was to be within four months from the date of the award.

Bid documents were thus issued to manufacturers or their local accredited agents for the supply and delivery of aluminum sulphate and a bid security of  Rs.800,000 was to accompany as bid security.

Bid once again successfully

But for this second tender bearing No AGM/SUP/CHEM/ALS/2008/03, Asha Lanka Enterprises (Pvt) Ltd. bid once again successfully, inside sources reveal.

It is reliably learned that the company that is yet to be blacklisted has managed to submit its bid for US $ 430,000 (approximately Rs. 9,900,000) on September 11, 2008.

Besides Asha Lanka Enterprises, several other companies also submitted their bids.  Included among the competitors were Patno Construction's offer of US$ 532,400, Cee Green Construction's offer of US$ 532,400, Missive Lanka Pvt. Ltd. at US$ 519,950, Dowell International (Pvt) Ltd at US$ 529,450 and Engineering Services Pte. at US$ 534,000.

In the meantime, what happens within the Ministry is still a mystery to most, for other bidders do have fair knowledge that Asha Lanka Enterprises that secured the first tender suffered a terrible disqualification. But investigations are slow to move, the blacklisting, according to inside sources yet to happen.

Thus with one messed up tender, it looks like the dubious company might just about stand another chance, despite alleged forgeries of bank guarantees.

What's more, the NWSDB officials who are concerned about this development have another legitimate query besides the possible fraudulent conduct. Even if the name is some day cleared, how to believe in the safety of a chemical supplied by a company of this nature to be used for water purification. God help the consumers.

Uses of Aluminum sulphate

Aluminium sulphate is used in water purification and as a mordant in dyeing and printing textiles. In water purification, it causes impurities to coagulate which are removed as the particulate settles to the bottom of the container or more easily filtered. This process is called coagulation or flocculation.

 (Courtesy Wikipediea)

Officials unavailable

Three attempts to reach the Minister of Water Supply and Drainage, A. L. M. Athaullah to obtain his views on the dubious company bidding for a second tender to be awarded by the Ministry proved futile.

Likewise, Director Tenders, Ministry of Water Supply and Drainage, Sujaideen was also unavailable to comment.

However, his office informed he would be only available to speak to the media tomorrow (5) at which point full details could be made available.

A senior Ministry official speaking on the basis of anonymity told The Sunday Leader that the Ministry would award the tender to the most suitable bidder and would not make questionable decisions regarding any tender.


Additional General Manger, NWSDB, Ratmalana, R. A. A. Ranawaka confirmed that the bank guarantees offered to the NWSDB were forged and explained that in keeping with the procedural requirements, the National Procurement Agency (NPA) was requested to blacklist the company.

"We have informed the Treasury and the NPA. Further, through the NPA, we have informed the Criminal Investigations Department (CID) to investigate into the fraud.

Asha Group

The directors of Asha Lanka Enterprises (Pvt) Ltd were not available for comment.  

Commercial Bank

Top bank officials declined to comment but admitted to the fact that a forgery had taken place. They said the matter has been brought to the notice of all the relevant authorities and the bank was keen to have its name cleared.  

Fraud Bureau

Officials from the Fraud Bureau confirmed that the matter has been brought to their notice by the NWSDB and said the matter was under investigation.

Officials added that it has been already established that the bank guarantees have been forged and that the bank also has complained with regard to the same, in addition to the NWSDB's complaint.

National Procurement Agency (NPA)

Top sources from the National Procurement Agency (NPA) confirmed that the Water Supply and Drainage Board (NWSDB) has informed them of the forged bank guarantees and that the said company was soon to be blacklisted. 


When contacted, senior CID officers declined to elaborate, adding that the matter has been brought to the Department's notice only very recently for investigation.


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