Controversy Over Kerawalapitiya LNG Plant Tender

 Minister Patali says he cannot be taken for a ride

by Ifham Nizam

Minister Patali Champika Ranawaka

Standard Cabinet Appointed Procurement Committee (SCAPC) spelled out its stance at a briefing to the Cabinet Committee on Economic Management (CCEM), to set aside five tender bidders selected for the construction of the 300 MW Liquid Natural Gas (LNG) Combined Cycle Plant at Kerawalapitiya, and was to be award it to Samsung Korea.

Informed sources said that Chairman of SCAPC, G. S. Withanage was stressing technical know-how and other technical details at CCEM.

However, when Megapolis and Western Province Development Minister Patali Champika Ranawaka arrived late to the CCEM, he could not be taken for a ride. The Minister with a degree in Electrical Engineering was well aware of the SCAPC move in and out.

SCAPC was questioned whether electrical engineers of mechanical engineers pin pointed such details.

“Civil servants should not try to mimic engineers,” an official said adding none of the engineers’ input was taken into consideration.

Energy experts said that any move to cancel and fresh bidding would take Sri Lanka to a worse situation claiming this would allow emergency rental power people to carry out their expensive businesses.

The Sunday Leader reliably learns that the Ven. Battaramulle Seelaratana Thero had already filed action of the move at the Court of Appeal. The Case will be taken up on Monday, July 17.

However, Power and Renewable Energy Ministry Secretary Dr. Suren Batagoda said that he is planning for a fresh proposal in the Cabinet.

Six of the eight bidders selected by the Ceylon Electricity Board (CEB) Technical Evaluation Committee (TEC) have qualified for the Financial Biddings round which is to be opened on Thursday.

However, it was cancelled following stiff opposition from various quarters.

Most of the CEB officials charged that a plan has been drafted to award the tender to a foreign party without a clear reason being given to justify it.

According to Power and Renewable Energy Minister Ranjith Siyambalapitiya under no circumstance will he leave room for any tender bidder to feel aggrieved at the end of the entire process.

“I have still not received any official details regarding the matter that you have raised. This is the first such tender that has been put across for the construction of the first LNG power plant. Hence, the onus is on the officials to conduct the tender process in a transparent manner and in keeping with the existing regulations. I have no intention of intervening in the tender board decisions. However, as the Minister I could ensure that no fraud takes place during the awarding of the said tender,” said Minister Siyambalapitiya at a press briefing in Colombo.

An energy expert said that there were various proposals on unsolicited basis revived by the government.

However, CEB decided to go on International Competitive Bidding (ICB) to obtain the best technology and tariff. During the tender proceedings there were enough clarifications sorted by bidders and CEB clarified all.

CEB wanted the financial proposal with proper finance plan supported by lenders. In order to get funding from international sources, the government granted an Implementation Agreement (IA) to this project. Having an IA would help the companies and lenders to reduce the risk and thereby CEB would get a competitive tariff. It is the standard to have IA for this capacity plant.

There were eight bidders and two were rejected by TEC. Six bidders were qualified and TEC recommended to SCAPC to open the financial bids of all six bidders who have passed the technical evaluation. TEC is fully knowledgeable of technical aspects.

Since the project is on 20 years, PPA with CEB engineers were closely monitoring the tender process.

TEC recommended six bidders on technical compliance. All six bidders declared that no deviation to Minimum Functional Specifications (MFS). MFS is a techno schedule of the PPA that will be signed once the tender is awarded to the lowest bidder.

SCAPC ignored the TEC recommendations and selected only Samsung JV of Korea and disqualified five bidders. Out of disqualified there are two bidders who are presently operating two power plants in Sri Lanka of the same nature, namely Kerawalapitiya and AES Kelanitissa.

“It was so strange to see why SCAPC took such a decision. Samsung influenced the SCAPC by writing against two other bidders. While such influencing is a point for rejection and bid bond should have been forfeited as government tender regulations. However, SCAPC ignored such provision and tried to award the tender for the same Samsung. CEB is at a power crisis by end 2018,” he said.

Also the tender says minimum three parties to be shortlisted as per ranking and negotiate with them. While such a condition is there, SCAPC still decided to award the tender to Samsung.

It is learnt ex male CEB GM, who was known for business dealings, is behind the scene.

SCAPC has TEC to leave the room and decided high handedly to reject five bidders out of six recommended by TEC.

In case Samsungs financial bid fails to meet tender conditions, CEB would have called for a fresh tender. During that period CEB has to hire rental power.

In a normal situation, if TEC has disqualified two bidders out of eight, SCAPC would see a possibility to include bidders to widen the competition.

“All dealings by SCAPC have been kept secret to Minster and CEB. CEB engineers’ union was angry on the issue,” he added.

 

Background

The Ceylon Electricity Board (CEB) has decided to call for an open tender for international competitors to construct this power plant costing USD 250 million. In the first instance, a high-ranking board member of the Board of Investment has expressed his opposition to calling for tenders.

Although several companies including a Korean company have requested to manufacture and maintain a new power station in Sri Lanka, he has asked for permission to tender without calling for tenders. But at the end the CEB boards have called for international open tender procedures.

Eight project proposals have been submitted for this project.

The Technical Evaluation Committee of the Ceylon Electricity Board (CEB) and technical engineers with a high technical expertise in supplying the tender have conducted an independent and professional assessment of the eight technical capabilities of the eight companies that have submitted eight applications.

Information has been uncovered that a high-impact influence on the transaction was made to the special team at the time of this assessment. However, despite these impacts, there are six companies to evaluate the second round.

The Technical Evaluation Committee has proposed that there are three foreign companies, two local, two foreign partner companies and one domestic company.

After the technical evaluation, the tender bids submitted to the tender boards will be submitted to the CEB Board of Directors, which will grant the approval of the tenders.

Shortly before this, the Tender Committee is headed by the Supreme Council of the Supreme Court, Suren Batagoda and G. S. Withanage, who have been involved in a fraudulent coal-mining case.

Officers have fraudulently used the tender for a company in Korea for the tender, regardless of the six out of the six companies recommended by the Technology Evaluation Committee, and only the Tender Papers published by the company was to be opened on Wednesday.

Earlier, officials said that arrangements have already been made to conduct the transaction at a single tender price without opening the prices of the companies.

The Vice President of this Korean company had been sentenced to prison last year due to the billions of rupees pledged to approve the projects.

If a tender is submitted, the applicants should make clarifications only if they are to be contacted by the Tender Board. However, it is illegal to submit a tender matter to the tender board if it is tendered by the tender board to obtain the tender and it is illegal.

The relevant application must be erased. However, the tender had been given by the Korean company, and as a result, the tender board has taken steps to remove the companies and select the same company.

The tender has been called for the construction of a 350MW power station in Kerawalapitiya to meet the electricity requirement of Sri Lanka over the next 25 years. After the construction of the company’s power plant has been completed and the power supply to the national system has been commenced by the CEB, these transactions will cost billions of rupees.

It is likely that the company that offered the tender fraudulently to the tender for the bidding process will likely be the company that has offered bids at the most reliable sources.

The top officials will receive huge commissions on the transfer of the project to the company by the same high cost and will incur an additional cost of about 15,000 million rupees annually in the country, the experts in the field of energy said.

4 Comments for “Controversy Over Kerawalapitiya LNG Plant Tender”

  1. Eng.M.V.R.Perera

    countries like India China USA are going for generating electricity from coal why go for LNG at such enormous cost to we the people when coal fueled electricity will give a kWh at generation at Rs 7 per kWh and when our per capita carbon emission per year is only 0.61 metric tons out of this only 1/3 is due to electricity compared with Singapore 7.28 USA 18.8 as such we have enough carbon space to to have 20 coal fueled power stations of 3x 300Mw. where solar is concerned by reading the net meter it will be shown that solar panel dealers have committed the biggest fraud in our country which our ministry of power should be accountable

  2. Jhon

    From reading the article it’s clear that the present operators are not happy about a new comer in the running.
    Always these companies manipulate the tender.
    Seems they have failed this time and hence the commotion.

  3. C M Perera

    Energy Sector is the most corrupted sector in Sri Lanka. The true story may not be
    what stated in the above article. Some political and government institutional parties who are highly opposing on selecting one bidder by the tender board may need to award the tender for their interested party. The Domestic and Local Companies are maintaining long lasting relationships with senior members of government institutions and ministers by offering various benefits and assisting financially for the election campaigns. Hence the above paper article is not the final judgement of this matter.

  4. C M Perera

    The True Stroy behind the above allegation is totaly difference. When reading the content given in the Article heading ” Background” it is clearly understood jounlist also have no clear idea of the matter. Sunday Leader, please aware the correct facts before writting this type of articles with the name of the Company. The Local and Domestic bidders are influencing to stop the tender opening since they are
    disqualified. If LTL is the only one party selected to opeingin of Financial Proposal, Champika Ranawaka will not interefere to stop it.

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