Coal racket continues!

Jan 27, 2017

This is the third article on Lanka Coal Company. Even before the second one was published, former chairman of the company Maithri Gunaratne sent a written response to the first article titled ‘Where is this Maithri?”. Respecting the right to reply, we published his response without any change.

Before starting on the third article, we thought it would be apt to say this. We are never here to settle personal scores or to help anyone to do so. Our media usage has nothing to do with character assassination. We cannot do anything if anyone wears the hat if it fits, following our revelations. That is the choice of that person. We have to stress the very same to Mr. Gunaratne too. We do not want to attack your privacy. We are talking about the Lanka Coal company.

The December 30 auditor general’s report was special, in that it revealed the irregularities in the purchases of coal. After studying the entire purchase process and going by the observations and the conclusions, it is only fair to ask the question as to what purpose Lanka Coal company serve. Its conduct in carrying out its responsibilities with regard to coal purchases is highly questionable.

The special standing procurement committee appointed by the cabinet on 03rd of March last year gave a tender to Adani Global to supply 260,000 mt of coal at 50.25 dollars per ton. However, only 146,117 tons were supplied and 113,883 mt were not. However, Lanka Coal did not notice that. That is how the company had disregarded its duties.

Furthermore, when the balance 113,883 mt of coal could have been purchased from Adani Nobel at 50.25 dollars under that tender, the same company was given another tender to supply at 64.77 dollars per ton. As a result, the CEB had to pay 14.52 dollars in excess, which translates into a loss of Rs. 240 million, according to the AG’s report. Can Lanka Coal’s irresponsible conduct here be pardoned?

Also, as per addendum 13 of the state procurement code of 2006, suppliers should get registered for all contracts worth over Rs. five million, under clause 8 of the state contracts act no 13 of 1987. However, Lanka Coal had disregarded this requirement until its fifth purchase. From 2009, six long-term purchases had been made, but no proper method has been introduced to measure the size of the coal to be supplied. The tender file in question only mentions it as ‘will be notified later.’ Not only that, the formula to measure the size of the coal had also been given wrong in the sixth purchase.

Lanka Coal has the responsibility of preparing the tender file. However, it has been unable to rectify its shortcomings in the past six years. The technical committee and the tender board have no responsibility in that regard. How can it be justified that the responsible party has failed to fulfill that responsibility.  

The AG’s report also observes a lack of coordination among Lanka Coal, subject ministry, Ceylon Shipping Corporation and the CEB. From 2009, the tender documents had been amended and the adverse impacts caused thereby to the suppliers have not been addressed, causing the entire tender process to be halted due to appeals.

At every shipment, samples are obtained and checked for quality. Until that report is received, the full payments are not made. However, the audit report notes that payments have been made in violation of that. For the shipment no. 100, the sample was obtained on 03 February 2016 and the quality report made available on 09 March, but the final payment was made by 08 February. For the shipment no. 101, the sample was obtained on 15 February 2016 and the quality report made available on 08 April but the final payment was made by 24 February. In that manner, payments for three shipments had been made outside the due process. Lanka Coal company had the responsibility. But, why did it did not take that responsibility? These are not imaginary, but are observations of the auditor general. Based on these observations, the AG has determined that the relevant authorities should consider if an institution that has acted against interests of the state should be continued.

Ashika Brahmana

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