The Sunday Leader

Government Is Following The Path Of The Previous Regime

by Nirmala Kannangara

  • The disclosed criteria shall not be modified or additional criteria shall not be introduced during evaluation
  • Despite the SC order, the cabinet of ministers had taken a decision to allow SSOE to supply coal until April 30, 2017
  • When Liberty Commodities defrauded, LCC got them suspended and went for arbitration

Ranjith Siyambalapitiya

The good governance administration has once again messed up with its guaranteed policies within a short span of two years. The removal of the Board of Directors of Lanka Coal Company who objected to award a tender that cost the country billions of rupees shows as to how this government is treading the way the previous regime took which led to their downfall on January 8, 2015.

Questions are raised as to why the Board of Directors of Lanka Coal Company Pvt. Ltd. (LCC) who had objected to the decision made by the Standing Cabinet Appoint Procurement Committee (SCAPC) for directing the Technical Evaluation Committee (TEC) to re-evaluate the bids received after getting a letter from one of the unsuccessful bidders on June 29, 2015 which led to the re-evaluation, was removed from their posts but not taken action against the members of the SCAPC and the TEC for the losses incurred to the state.  .

Minister Siyambalapitiya’s letter removing Maithri Gunaratne from his post, B. M. S. Batagoda’s misleading letter and Gunaratne’s warning letter to B.M.S. Batagoda in 2015 against the violation of government procument guidelines

“Neither the State nor the SCAPC shall act contrary to the bid documents and government procurement guidelines. According to these guidelines, after the bidding is closed and during the evaluation, bidding criteria shall not be modified or additional criteria shall not be introduced. Also it states any bidder who contacts LCC or any other person or organisation in any matter related to the bids shall be rejected. Disregarding these guidelines, on the directives of the SCAPC, the TEC re-evaluated the tender to supply coal, in order to award it to their ‘choice’ who was one of the unsuccessful bidders at the initial round - the Swiss Singapore Overseas Enterprises (Pvt) Limited (SSOE). Having offered the tender to SSOE after the re-evaluation, it is surprising as to why the Power and Renewable Energy Minister removed the LCC Board of Directors without taking any action against the members of the SCAPC and TEC,” highly reliable Power and Renewable Energy Ministry sources said on condition of anonymity.        

In order to purchase coal to Lakvijaya power plant for two years, tenders were called in April, 2015 from prospective bidders and the lowest bidder was Nobel Resources International Pvt. Limited according to the Technical Evaluation Committee (TEC) report.

According to the TEC report No: 15A of June 17, 2015, the bidders and their prices were as follows:-

Nobel Resources International Pvt. Limited – US $ 90.219 per MT, SUEK AG – US$ 90.645 per MT, Trafigura Pvt. Limited- US$ 101.968 per MT, Adani Global Pvt. Limited – US$ 103.108 per MT, Swiss Singapore Overseas Enterprises Pvt. Ltd. -US$ 103.782 per MT and Liberty Commodities Limited – US$ 113.604 per MT.

 

Bids Re-evaluated 

However, SCAPC received a letter  from SSOE on June 29, 2015 and SCAP on the same day directed the TEC to re-evaluate the bids, the prices submitted by the bidders which led to the present debate is as follows-

SSOE – US$ 82.47 per MT, Nobel Resources – US$ 83.09 per MT, SUEK AG – US$ 83.49 per MT, Trafigura US$ – 87.50 per MT, Adani Global US$ 88.75 per MT and Liberty Commodities – US$ 91.90 per MT.

 Secretary, Power and Renewable Energy Ministry, B. M. S. Batagoda in a letter dated January 15, 2017 addressed to the Minister of Power and Renewable Energy, Treasury Secretary, Chairman LCO, Chairman Sri Lanka Ports Authority and Chairman Lanka Shipping Corporation, based on the Auditor General’s report accused LCO for the loss incurred to the country from the coal purchase from 2009 to 2016.

According to the sources, Batagoda’s letter is misleading and had tried to put the entire blame from 2009 to 2016 purchases, on the Board of Directors headed by Maithri Gunaratne. “How can he blame Gunaratne and the board when they took over office only in 2015? In addition Batagoda had accused Gunaratne on a matter the Auditor General had neverraised as he (Gunaratne) had answered to an audit query which had been accepted by the Auditor General.

The Supreme Court ruling that was delivered on June 24, 2016 had clearly stated the cabinet memorandum which was submitted by Batagoda on the coal purchase, had misled the Cabinet of Ministers. Instead of accusing Gunaratne and removing the entire Board of Directors alleging they were responsible for the loss incurred, he (Batagoda) should have resigned from his post immediately after the Supreme Court said that he had misled the Cabinet of Ministers,” sources alleged.

Nobel Resources International (Pvt) Limited filed legal action in Supreme Court against 75 parties including Minister of Renewable Energy, Ministry Secretary, LCO and Cabinet of Ministers for not awarding the coal tender despite being the lowest bidder but to the fifth lowest bidder.

The President Counsel who appeared for Nobel Resources drew the attention of court, the bidding document and the evaluation criteria referred to in clause 5.3.20 of the government procurement guidelines. The guideline is as thus, ‘the disclosed criteria shall not be modified or additional criteria shall not be introduced during evaluation’.These clauses which have been brought in the bid document and government procurement guidelines is to safeguard the bidders and to ensure transparency, justice and equality of treatment in evaluating bids which have to be strictly observed by the SCAPC. It postulates that no one, neither the States nor the SCAPC shall act contrary to the bid conditions and government procurement guidelines.

It was also revealed as to how SSOE had written to SCAPC on June 29, 2015 after opening the bids which led the SCAPC to direct the TEC to re-evaluate the tender allegedly in favour of SSOE.

The Sunday Leader is in possession of LCC Chairman’s letter dated July 2, 2015 to Secretary Ministry of Power and Renewable Energy drawing his utmost astonishment the way SCAPC had violated procurement guidelines and had brought to the attention that the non-interpretation of the tender documents will bring disrepute to the SCAPC and the Minister. The letter further states that any deviation will bring serious allegations against the Ministry of Power and Renewable Energy and the Minister.     

 

Landmark order 

Chief Justice K. Siripavan, on June 24, 2016 dismissed the application on a preliminary objection raised by the respondents but delivering a landmark order said that the court has been given power to grant relief as it may deem just and equitable and therefore decided to go into the merits of the case as some of the events that took place in the award of the tender to the 22nd Respondent (SSOE) shocks the conscience of the Court, especially when the awarding of the tender involves public funds.

The order further stated as thus, ‘Considering the procedural flaws, I have referred to above, the fact that the award of tender involved public funds, and the solemn duty of the Court to protect the Rule of Law embodied in the constitution in order to ensure its credibility in the faith of the people, I consider it appropriate to make the following directions -

(a)   The 3rd Respondent (LCO) may terminate the contract entered into with SSOE for the supply of coal to Lakvijaya Coal Power Plant after giving reasonable notice to the said respondent;

And

(b)   Call for fresh bids in terms of the law, for the supply of coal for the said power plant following competitive bidding procedure.   

Despite of the SC order, the cabinet of ministers on November 1, 2016 had taken a decision to allow SSOE to supply coal until April 30, 2017.

“We at the Ministry know as to how Gunaratne and the Board of Directors worked tirelessly and dedicatedly during the past two years and did not leave any stone unturned to work transparently to ensure that they have not involved in any corrupt activities. In that backdrop it was shocking to learn as to how Batagoda who is alleged to have involved in many malpractices which we can prove to blame Gunaratne for the loss incurred to LCC. The loss incurred during his tenure as the Chairman LCC was not his fault but the SCAPC for re-evaluation and Batagoda for misleading the cabinet of ministers despite of the SC ruling.

 

Defrauding company suspended 

“In his letter, Batagoda accuses Gunaratne for the loss of Rs. 204.831 million on spot tenders due to signing contracts to benefit the supplier. Although Batagoda tries to show the government officials that because of signing an agreement for spot tenders, it was a loss to the company, Batagoda knows very well as to how Gunaratne got the company in question suspended from supplying coal in future,” sources said.

According to the sources, when it was realised that Liberty Commodities (Pvt.) Ltd. had defrauded LCC when procuring spot tenders, Gunaratne had filed a case against this company in Commercial High Courts and had got them suspended. In the meantime at arbitration, a directive had been given to recover 64% of the said loss which amounts to Rs. 130 million and in order to recover the balance 36% a case in pending in courts.

“It was Gunaratne and the Board of Directors when they realised how Liberty Commodities had defrauded LCC got them suspended and went for arbitration and to recover 64% but not Batagoda or the SCAPC. After the suspension, the partners of Liberty Commodities applied to register themselves under a new company – SIMEC. When Gunaratne found out that the same fraudulent company is now trying to get registration to supply coal in future, and informed Batagoda that they should not given registration, Batagoda said that they were not the same party and given the registration. Isn’t this a fraud? By registering SIMEC they are now eligible to bid in future and can continue with the same fraud. Having given the registration, Batagoda is now pointing the finger at Gunaratne,” sources alleged. Meanwhile it is learnt as to how LCC under Gunaratne was able to supply the entire coal need to the coal power project during 2015/ 2016 and was able to bring down the demurrage charges comparing to the previous years from Rs. 607 million to Rs. 115 million. Gunaratne was also able to bring down the barge charges from US$ 4.1 per MT to US$ 3 per MT and the Management fee from Rs. 41 per MT to Rs. 17 per MT.

“Other than the loss incurred during the spot tender which the LCC is now in the process of recovering from an arbitration,  Gunaratne and the Board of Directors have not incurred any loss to the LCC but had generated income. The reason why they were removed was not because of anything but Batagoda and Minister Ranjith Siyambalapitiya knew that Gunaratne will prevent them from awarding tenders to their ‘friends’ if he continues to hold office,” sources said.

All attempts to contact Batagoda and Deputy Minister of Power and Renewable Energy Ajith C Perera for a comment failed as they did not answer the calls. Although Text messages were send to them, they did not respond till the paper went to press.

Government Is Following The Path Of The Previous Regime
by Nirmala KannangaraThe disclosed criteria shall not be modified or additional criteria shall not be introduced during evaluationDespite the SC order, the cabinet of ministers had taken a decision to allow SSOE to supply coal until April 30, 2017When Liberty Commodities defrauded, LCC got them suspended and went for arbitration
The good governance administration has once again messed up with its guaranteed policies within a short span of two years. The removal of the Board of Directors of Lanka Coal Company who objected to award a tender that cost the country billions of rupees shows as to how this government is treading the way the previous regime took which led to their downfall on January 8, 2015.Questions are raised as to why the Board of Directors of Lanka Coal Company Pvt. Ltd. (LCC) who had objected to the decision made by the Standing Cabinet Appoint Procurement Committee (SCAPC) for directing the Technical Evaluation Committee (TEC) to re-evaluate the bids received after getting a letter from one of the unsuccessful bidders on June 29, 2015 which led to the re-evaluation, was removed from their posts but not taken action against the members of the SCAPC and the TEC for the losses incurred to the state.  .“Neither the State nor the SCAPC shall act contrary to the bid documents and government procurement guidelines. According to these guidelines, after the bidding is closed and during the evaluation, bidding criteria shall not be modified or additional criteria shall not be introduced. Also it states any bidder who contacts LCC or any other person or organisation in any matter related to the bids shall be rejected. Disregarding these guidelines, on the directives of the SCAPC, the TEC re-evaluated the tender to supply coal, in order to award it to their ‘choice’ who was one of the unsuccessful bidders at the initial round – the Swiss Singapore Overseas Enterprises (Pvt) Limited (SSOE). Having offered the tender to SSOE after the re-evaluation, it is surprising as to why the Power and Renewable Energy Minister removed the LCC Board of Directors without taking any action against the members of the SCAPC and TEC,” highly reliable Power and Renewable Energy Ministry sources said on condition of anonymity.        In order to purchase coal to Lakvijaya power plant for two years, tenders were called in April, 2015 from prospective bidders and the lowest bidder was Nobel Resources International Pvt. Limited according to the Technical Evaluation Committee (TEC) report.According to the TEC report No: 15A of June 17, 2015, the bidders and their prices were as follows:-Nobel Resources International Pvt. Limited – US $ 90.219 per MT, SUEK AG – US$ 90.645 per MT, Trafigura Pvt. Limited- US$ 101.968 per MT, Adani Global Pvt. Limited – US$ 103.108 per MT, Swiss Singapore Overseas Enterprises Pvt. Ltd. -US$ 103.782 per MT and Liberty Commodities Limited – US$ 113.604 per MT.
Bids Re-evaluated
However, SCAPC received a letter  from SSOE on June 29, 2015 and SCAP on the same day directed the TEC to re-evaluate the bids, the prices submitted by the bidders which led to the present debate is as follows-SSOE – US$ 82.47 per MT, Nobel Resources – US$ 83.09 per MT, SUEK AG – US$ 83.49 per MT, Trafigura US$ – 87.50 per MT, Adani Global US$ 88.75 per MT and Liberty Commodities – US$ 91.90 per MT. Secretary, Power and Renewable Energy Ministry, B. M. S. Batagoda in a letter dated January 15, 2017 addressed to the Minister of Power and Renewable Energy, Treasury Secretary, Chairman LCO, Chairman Sri Lanka Ports Authority and Chairman Lanka Shipping Corporation, based on the Auditor General’s report accused LCO for the loss incurred to the country from the coal purchase from 2009 to 2016.According to the sources, Batagoda’s letter is misleading and had tried to put the entire blame from 2009 to 2016 purchases, on the Board of Directors headed by Maithri Gunaratne. “How can he blame Gunaratne and the board when they took over office only in 2015? In addition Batagoda had accused Gunaratne on a matter the Auditor General had neverraised as he (Gunaratne) had answered to an audit query which had been accepted by the Auditor General. The Supreme Court ruling that was delivered on June 24, 2016 had clearly stated the cabinet memorandum which was submitted by Batagoda on the coal purchase, had misled the Cabinet of Ministers. Instead of accusing Gunaratne and removing the entire Board of Directors alleging they were responsible for the loss incurred, he (Batagoda) should have resigned from his post immediately after the Supreme Court said that he had misled the Cabinet of Ministers,” sources alleged.Nobel Resources International (Pvt) Limited filed legal action in Supreme Court against 75 parties including Minister of Renewable Energy, Ministry Secretary, LCO and Cabinet of Ministers for not awarding the coal tender despite being the lowest bidder but to the fifth lowest bidder.The President Counsel who appeared for Nobel Resources drew the attention of court, the bidding document and the evaluation criteria referred to in clause 5.3.20 of the government procurement guidelines. The guideline is as thus, ‘the disclosed criteria shall not be modified or additional criteria shall not be introduced during evaluation’.These clauses which have been brought in the bid document and government procurement guidelines is to safeguard the bidders and to ensure transparency, justice and equality of treatment in evaluating bids which have to be strictly observed by the SCAPC. It postulates that no one, neither the States nor the SCAPC shall act contrary to the bid conditions and government procurement guidelines.It was also revealed as to how SSOE had written to SCAPC on June 29, 2015 after opening the bids which led the SCAPC to direct the TEC to re-evaluate the tender allegedly in favour of SSOE.The Sunday Leader is in possession of LCC Chairman’s letter dated July 2, 2015 to Secretary Ministry of Power and Renewable Energy drawing his utmost astonishment the way SCAPC had violated procurement guidelines and had brought to the attention that the non-interpretation of the tender documents will bring disrepute to the SCAPC and the Minister. The letter further states that any deviation will bring serious allegations against the Ministry of Power and Renewable Energy and the Minister.
Landmark order
Chief Justice K. Siripavan, on June 24, 2016 dismissed the application on a preliminary objection raised by the respondents but delivering a landmark order said that the court has been given power to grant relief as it may deem just and equitable and therefore decided to go into the merits of the case as some of the events that took place in the award of the tender to the 22nd Respondent (SSOE) shocks the conscience of the Court, especially when the awarding of the tender involves public funds.The order further stated as thus, ‘Considering the procedural flaws, I have referred to above, the fact that the award of tender involved public funds, and the solemn duty of the Court to protect the Rule of Law embodied in the constitution in order to ensure its credibility in the faith of the people, I consider it appropriate to make the following directions -(a)   The 3rd Respondent (LCO) may terminate the contract entered into with SSOE for the supply of coal to Lakvijaya Coal Power Plant after giving reasonable notice to the said respondent;And(b)   Call for fresh bids in terms of the law, for the supply of coal for the said power plant following competitive bidding procedure.   Despite of the SC order, the cabinet of ministers on November 1, 2016 had taken a decision to allow SSOE to supply coal until April 30, 2017.“We at the Ministry know as to how Gunaratne and the Board of Directors worked tirelessly and dedicatedly during the past two years and did not leave any stone unturned to work transparently to ensure that they have not involved in any corrupt activities. In that backdrop it was shocking to learn as to how Batagoda who is alleged to have involved in many malpractices which we can prove to blame Gunaratne for the loss incurred to LCC. The loss incurred during his tenure as the Chairman LCC was not his fault but the SCAPC for re-evaluation and Batagoda for misleading the cabinet of ministers despite of the SC ruling.
Defrauding company suspended
“In his letter, Batagoda accuses Gunaratne for the loss of Rs. 204.831 million on spot tenders due to signing contracts to benefit the supplier. Although Batagoda tries to show the government officials that because of signing an agreement for spot tenders, it was a loss to the company, Batagoda knows very well as to how Gunaratne got the company in question suspended from supplying coal in future,” sources said.According to the sources, when it was realised that Liberty Commodities (Pvt.) Ltd. had defrauded LCC when procuring spot tenders, Gunaratne had filed a case against this company in Commercial High Courts and had got them suspended. In the meantime at arbitration, a directive had been given to recover 64% of the said loss which amounts to Rs. 130 million and in order to recover the balance 36% a case in pending in courts.“It was Gunaratne and the Board of Directors when they realised how Liberty Commodities had defrauded LCC got them suspended and went for arbitration and to recover 64% but not Batagoda or the SCAPC. After the suspension, the partners of Liberty Commodities applied to register themselves under a new company – SIMEC. When Gunaratne found out that the same fraudulent company is now trying to get registration to supply coal in future, and informed Batagoda that they should not given registration, Batagoda said that they were not the same party and given the registration. Isn’t this a fraud? By registering SIMEC they are now eligible to bid in future and can continue with the same fraud. Having given the registration, Batagoda is now pointing the finger at Gunaratne,” sources alleged. Meanwhile it is learnt as to how LCC under Gunaratne was able to supply the entire coal need to the coal power project during 2015/ 2016 and was able to bring down the demurrage charges comparing to the previous years from Rs. 607 million to Rs. 115 million. Gunaratne was also able to bring down the barge charges from US$ 4.1 per MT to US$ 3 per MT and the Management fee from Rs. 41 per MT to Rs. 17 per MT.“Other than the loss incurred during the spot tender which the LCC is now in the process of recovering from an arbitration,  Gunaratne and the Board of Directors have not incurred any loss to the LCC but had generated income. The reason why they were removed was not because of anything but Batagoda and Minister Ranjith Siyambalapitiya knew that Gunaratne will prevent them from awarding tenders to their ‘friends’ if he continues to hold office,” sources said.All attempts to contact Batagoda and Deputy Minister of Power and Renewable Energy Ajith C Perera for a comment failed as they did not answer the calls. Although Text messages were send to them, they did not respond till the paper went to press.

2 Comments for “Government Is Following The Path Of The Previous Regime”

  1. ed

    SORRY !!!!!! IT IS YOU WHO ARE FOLLOWING THE FORMER REGIME CORRUPTED PROCUREMENT PROTOCOL ON COAL !!!!! WHY DO YOU HAVE TO FIRE GUNARATNE WHY NOT BATAGODA ??????

    WHERE IS AJITH PERERA ??? WHY IS HE SILENT ?????? HE IS THE ONE WHO SAID THAT HE WILL STOP ALL CORRUPTION UNDER YAHAPALANAYA ?????

    WHY NOT INVESTIGATE AND STOP THIS GAME !!!!!!!! YOU KNOW OUR COUNTRY IS BANKCRUPT ?????????

  2. Nimal

    What do you expect?This is a third world where politicians get to Parliament not to respect the mandate, if they ever have one but to rob as much as possible and they think it’s their god damn right. We need a New party of good people. Watch what will happen to the ex leader of Gambia?
    Already his wealth is been confiscated and the rest being sought and will spend his time in a miserable cell. Mood and the culture of the world is changing for the good of the entire world.

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