SC case filed against Power Ministry on Lakdanavi

By Chathuri Dissanayake 

A Fundamental Rights petition was filed in the Supreme Court yesterday against awarding the tender for the second LNG plant in Kerawalapitiya to a Chinese company, as the Power and Renewable Energy Ministry readies to present a Cabinet paper seeking approval for the procurement.

The Cabinet paper is likely to be presented today. The National Movement for Consumer Rights Protection, filed the FR petition. 

The organisation claimes that Power and Renewable Energy Minister Ranjith Siyambalapitiya, the Ministry Secretary Dr. B. M. S. Batagoda, and officials of the Procurement Appeals Board (PAB) for the tender, have violated the tender process and moved outside of procurement regulations outlined in the Sri Lanka Electricity Act, with the intention of issuing a letter of intent to and entering into a contract to run the project with a Chinese company, which came in second in the bidding process. 

The petitioners claimed that the PAB has overstepped its mandate in commenting on the technical aspects of the tender process and the financial capacity of the bidders. 

“The Appeals Board has evaluated the technical aspects of the tender when they have no expertise to do so. They are required only to look at the Procurement Procedure, to ensure that due process has been followed not make other evaluations,” National Movement for Consumer Rights Protection Member Prathibha Mahanamahewa said.  

The procurement process of the tender has been riddled with controversy from the beginning, with CAPC members being summoned before Cabinet Committee on Economic Management. 

The bidding process for the Build Own Operate and Transfer (BOOT) tender for the second LNG plant commenced last year, with the Technical Evaluation Committee and the Cabinet Appointed Procurement Committee recommending Lakdanavi Ltd to be awarded the contract. 

The second bidder, a Chinese Company consortium, GCL China, Windforce, and RenewGen offering a price of Rs. 15.97 per kWh, appealed the decision by the Cabinet Appointed Procurement Committee (CAPC) and Technical Evaluation Committee (TEC), which recommended to award the tender to Ceylon Electricity Board-owned company Lakdanavi Ltd, which came lowest in the bidding process offering Rs. 14.98 per kWh for the plant.

The Appeals submitted by the Consortium of GCL China, Windforce, and RenewGen highlights the issue of the conflict of interest between lowest bidder Lakdanavi and the TEC members, the majority of whom are CEB officials. Further, the appeal also stresses that the lowest bidder relies on Government subsidies. 

Writing to the PAB, Ministry Secretary Dr. Batagoda, who was also in the CAPC which recommended awarding the tender to Lakdanavi, agrees with the concerns raised by the appellant regarding conflict of interest, project cost and the concessions received by Lakdanavi. The letter, seen by Daily FT, also raises concerns over several technical matters in the project, despite a separate TEC evaluation. The concerns regarding Value Added Tax (VAT) and Nation Building Tax (NBT) raised by the Appellant were also discussed by the PABC before the recommendation to award the tender to Lakdanavi was made. However, Dr. Batagoda also contradicts the PABC recommendation which he was signatory to in the letter to PAB. 

Further, the issue of conflict of interest has not been addressed at the point of tender document, which has not prevented CEB subsidiaries from bidding for the project. Dr. Batagoda, in his letter, also points out that projects with donor funding specifically eliminate CEB subsidiaries to prevent any conflict of interest. However, as this is not a donor-funded project, it does not exempt CEB subsidiaries.