COPE discovers losses of Rs. 1.1 b due to ad hoc purchase of coal by Lanka Coal Company

• Senior officials of Lanka Coal appear before COPE 
• Company has purchased coal under short-term method without following proper procurement process 
• Officials said they expected to take the advantage of the fluctuations in market prices in making short-term purchases

The country has suffered losses to the tune of Rs. 1.1 billion as a result of not specifying the quantity of coal required when calling for tenders for the purchase of coal by Lanka Coal Company Ltd., a probe by Parliamentary Oversight Committee – the Committee on Public Enterprises (COPE) found yesterday.

Lanka Ceylon Coal Company had also purchased coal under the short-term method without following the proper procurement process.

COPE met yesterday at the Parliamentary Complex with its chairman Charitha Herath presiding. A group of senior officials of Lanka Coal Company were summoned to respond to the queries by COPE.

The officials told the Committee that they expected to take the advantage of the fluctuations in market prices by purchasing coal under the short-term method rather than the long-term method.

However, the COPE Chairman pointed out the need to implement these tenders with the approval of the Cabinet of Ministers in accordance with the prescribed procurement process.

The Norochcholai Lakvijaya Power Plant was added to the national grid to meet a 900 MW electricity requirement, but there was a shortfall of 90 MW, it was revealed.

The Secretary of the Cabinet Procurement Committee has been absent from the Procurement Committee on eight occasions and an Additional Secretary has been appointed for this purpose. 

Therefore, the COPE Committee noted that there was a problem with the legitimacy of decisions taken. However, officials said that it was possible to appoint an additional secretary for this purpose. 

The Chairman recommended submitting an immediate report to the COPE to ascertain whether this was correct.

The Committee also questioned the reasons for handing over three barges purchased by the Ceylon Electricity Board at a cost of Rs. 1,100 million to the Sri Lanka Navy. 

The Committee directed the Secretary to the Ministry to submit an immediate report on the methodology of handing over the barges to the Sri Lanka Navy and the reasons for their inability to maintain them.

Although it was stated in newspaper advertisements that five years’ experience in coal supply is required to win the tender, applications were issued to companies with three years’ experience, it was also revealed.

The Committee was of the view that this had put the coal company at a disadvantage. The Committee also discussed that there was no formal procedure for the last day of bidding. The Committee decided that these matters should be duly investigated.

The Committee also considered whether the involvement of the Sri Lanka Shipping Corporation in the purchase of coal would result in a loss than the purchase of coal through another institution under the normal tender system. The Committee also recommended submitting a report in this regard to the Committee on Public Enterprises as soon as possible.

The Committee also noted the need for regular meetings with the Ceylon Electricity Board, the Ceylon Shipping Corporation, the Ceylon Coal Company and the relevant ministry and COPE members also drew attention to the cost of diesel power plants and coal power plants.

The COPE Chairman instructed officials to submit all reports on these matters to the COPE within a month.

COPE members Ministers Mahinda Amaraweera, Mahindananda Aluthgamage, State Ministers Nalaka Godahewa, Sarath Weerasekera, Ajith Nivard Cabraal, MPs Patali Champika Ranawaka, Eran Wickramaratne, Jagath Pushpakumara, Premnath C. Dolawatta, S.M. Marikkar and Rauff Hakeem were present at the meeting.