Lanka Coal playing with fire

Oct 28, 2015

During the Rajapaksa era the tender procedure for the procurement of coal to operate the Norochcholai power plant was habitually marred with controversy.

The general practice used to be for the tender to be awarded, and then cancelled, then to be re-awarded to be cancelled again. Ravi Wijerathne according to sources was the front for Yositha Rajapakse and Noble Resources International Pvt. Ltd, this company benefited due to Yoshitha’s involvement.

We understand a few months back the cabinet approval was given for spot orders, because of a powerful VIP after two spot orders the spot orders were stopped and the cabinet approved an order for 2.25 million metric tons of coal for one year from Swiss Singapore Overseas Enterprises, which supplies coal from South Africa, a beneficiary in the past.

While it is alleged that the price given to Swiss Singapore Overseas Enterprises is high, the spot orders according to CEB sources was not practical given the seasonality of the product and the fluctuating prices.

CEB sources are now saying prompt action would have to be taken to import coal as soon as possible to prevent a shutdown of the plant due to shortage of coal and that the Ceylon Electricity Board (CEB) will have to purchase power at higher rates from diesel power plants in order to maintain an undisrupted power supply to the people.

The sharks that supply diesel power are already hovering round sources say for the next kill, given the premium price they can command in crisis. We understand a stock of 8000 metric tons of coal is needed daily to operate all three phases of the Norochcholai power plant with the current stock sufficient for less than two weeks, the CEB will incur heavy losses if it has to shut down the power plant due to a shortage of coal, thanks to the bickering going on currently at Lanka coal.

Sources say six companies generally make bids for the tender to supply 2.25 million metric tons of coal per year. Many of them get disqualified at the evaluation and the evaluation was generally manipulated by officials during the Rajapakse time based on orders given from the top.

The latest tender awarded some weeks back has taken a twist because according to sources it is alleged that the current Chairman is standing in the way of the coal being ordered because he had allegedly got resources form Noble Resources International Pvt. Ltd as campaign support for the last general elections and he is heavily under obligation use delaying tactics to support Yositha’s company Noble Resources International Pvt. Ltd to get a stay order to prevent lanka coal from ordering the coal required to run the plant as per the cabinet paper. Both parties are expected to bring dirt of the past to court while the country suffers.

It is not the interest of our group to support any company but to promote transparency in state tenders. Nevertheless, we understand whoever wins the suppliers fight tooth and nail given the nature of the business. But it is ridiculous to note that while the newest tender fight between the supplier, Chairman lanka coal and the CEB is on fire, the innocent taxpayers of the country will have to continue pay for the collecting losses at CEB until the fire is doused for good by cleaning up the company. Until then three cheers to Yahapalana.

For good governance