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Wednesday, 21 March 2018 00:53 - - {{hitsCtrl.values.hits}}
By Chathuri Dissanayake
A move to award the supply tender for tea for this year to a private company is threatening the profitability of the Janatha Estate Development Board despite a Cabinet decision to procure supplies from the state-owned entity, highly-placed sources claim.
The Defence Ministry is currently finishing up the procurement process to select a private supplier to procure 35,000 kg of tea needed for the Sri Lanka Army every month, taking crucial business away from the struggling plantation company.
In a last-ditch effort to salvage business to the JEDB, a presentation had been made to Prime Minister Ranil Wickremesinghe’s advisor R. Paskaralingam last week urging intervention to secure the deal, which led to a meeting with all stakeholders on 16 March. The Ceylon Estate Staffs’ Union warned that moves were afoot to award the tender to a private bidder, following a competitive tender process, despite two Cabinet decisions to procure all the tea needed for state entities from the JEDB, with one made in 2005 and a more recent decision made in November 2017.
“Even with the Cabinet decision to say they have to buy it from the JEDB, they have called for a competitive tender and now they are trying to award it to a private bidder who has offered to sell the tea at a very low price. It is not possible to sell at the price they have quoted unless it is very low-quality tea,” Ceylon Estate Staffs’ Union General Secretary Nath Amarasinghe told the Daily FT.
The instructions for the JEDB to supply tea to all state-owned entities were repeated by the Parliamentary Committee on Public Enterprises (COPE) in February 2016. In December 2016 the Auditor General’s Department asked for explanations as to why the Army had deviated from the Cabinet decision in 2014 and subsequent instructions by the COPE noting that the burden on the Treasury could be reduced by supporting the businesses of entities such as the JEDB which were involved in commercial activities with funds from the Government.
Further, the letter also noted that the Government had also made a policy decision on the same. As a result, in 2017 the Army took steps to obtain tea supplies from the JEDB but has called for tenders for the 2018 supply.
The Defence Ministry Secretary, President’s Counsel Kapila Waidyaratne, declined to comment on the matter as the procurement process was still ongoing.
However, Public Enterprise Development Ministry Secretary Ravindra Hevawitharana claimed they were still hopeful that the tender would be awarded to the JEDB by virtue of their product quality.
The business from the Army to supply 35,000 kg of tea every month has been a crucial factor for the lossmaking estate to turn around their balance sheet last year, adding Rs. 93 million to the income through tea marketing which earlier had a negative balance of Rs. 4.24 million.
The JEDB has reduced its overall losses by 48% last year, with increasing tea production making total revenue of 1.2 billion in 2017.
However, the unions are now worried that the state-owned estate notorious for defaulting on Employee Provident Fund (EPF) and Employee Trust Fund (EPF) payments will not even be able to pay staff salaries in the Tea Marketing Department due to the loss of business.
“In that section there are over 25 people working, and with this situation I am not sure if they will be able to pay the salaries,” Amarasinghe said.
Further, the department has already procured tea worth Rs. 2 million from the market to ensure the supply chain is unbroken in anticipation of the business which will now go to waste, he said.
The estate has already lost the tender to supply the Navy as the officer responsible for submitting the bidding document was delayed.
Action against the officer has been taken in this regard, Hewawitharana assured.
