Coal bid runs into fresh controversy

The fifty billion rupee per year tender to supply coal to the Lakvijaya Power Plant in Norochcholai for three years has run into fresh controversy, with the chairman of the Technical Evaluation Committee (TEC) reportedly refusing to chair the technical committee for the spot tender scheduled for August 13, Daily Mirror learns.

Mr. D.K.B.S Thilakasena, the chairman of the TEC, which oversaw the previous bid (which is currently under a cloud due to the U-turn made by the Standing Cabinet Appointed Procurement Committee (SCAPC)), has refused to sit on the committee for the spot tender that was called for, sources said.

The spot tender was called, following appeals to the Procurement Appeal Board (PAB) by at least four bidders following the U-turn by SCAPC, in order to supply a portion of the coal required for the running of the plant, until a decision is made regarding the tender.

The issue surfaced following the award of the tender, on June 13, by the Lanka Coal Company to Noble Resources International Pte Ltd, to supply 2.2 million tonnes of coal per year for a period of three years to run the plant. It is said to be one of the biggest tenders awarded in recent times.

The tender was awarded, after bids were opened on June 11, following a competitive bidding process in which seven companies competed to win the tender.

The tenders had been vetted by the TEC and a tender board of Lanka Coal Company (a subsidiary of the Ceylon Electricity Board) after which the tender had been awarded to the company which met the required specifications at the lowest price.

However, on June 29, Swiss Singapore Overseas Enterprises Pte Ltd, a company which had tendered a higher bid, had written to SCAPC calling for a reevaluation of its bid. The communication by the Swiss company was against the code prescribed for bidders.

The issue took a different turn after SCAPC, on the very same day it received the communication from the disgruntled bidder, wrote to the TEC of Lanka Coal Company and ordered them to re scrutinise the tenders and to disregard two vital criteria it had previously imposed.

The directive from SCAPC had been issued by the secretary of the SCAPC, who is also an associate of the secretary of the Ministry of Power and Energy, Dr. B. M. S Batagoda.

Authoritative sources told Daily Mirror that the two vital criteria (clauses 1.4 and 1.5 of the bid document) were with regard to the size of the coal.

“The issues around these two criteria had been considered extensively during the bidding process. They can’t suddenly decide that they should not form a part of the bid document. That is completely out of line,” the source said.

Thereafter, on July 3, SCAPC received the reevaluation report of the TEC, following its directive of June 29th. On July 6 the tender was awarded to the Swiss company, causing the other bidders to cry foul and appeal the awarding of the tender.

“The efficiency of this whole thing is nothing but suspicious. You have a letter from a disgruntled bidder and SCAPC seems to have worked overtime, because on the same day they write to LCC. They receive the reevaluation on the July 3, which is a Friday. And next Monday (July 6) itself, the tender is awarded to Swiss Singapore, which, if nothing else, just doesn’t look right,” the source said.

The issue remains at a standstill, with the Procurement Appeal Board yet to make a decision on the appeals.

“Due to this delay we will not have coal for at least a short time, and the power plant will come to a halt. The losses from this can run into billions of the tax payers’ rupees, because restarting the turbines will incur a colossal expense. Just to restart the Norochcholai turbines, you need 450,000 litres of diesel,” another source said.

When contacted, the chairman of Lanka Coal Company, Maithri Gunarathne, refused to comment. However, the secretary to the Ministry of Power and Energy (and member of SCAPC), Dr. B. M. S Batagoda told Daily Mirror that there was nothing unusual about the process.

“The company which had initially been granted the tender was the company that had always won this tender during the last five years. There was nothing wrong in their communicating with SCAPC. We have chosen the most suitable bidder,” he said.

Mr. Thilakasena, who chaired the TEC, when contacted on Monday, refused to comment to the media and said that he continues to function as the chairman of the Technical Evaluation Committee. (Hafeel Farisz and Shihara Maduwage)