SRI LANKA LOST RS. 4,145.43 MILLION DUE TO IRREGULAR COAL PURCHASES BETWEEN 2009 AND 2016

Image: Coal workers in India.

29/01/2017

The Auditor General has recommended that a formal and practical Annual Procurement Plan be put in place to avoid malpractices in coal purchases by the Government.

This comes after an audit probe found estimated losses amounting to more than Rs. 4,145.43 million due to irregularities in coal purchases between 2009 and 2016.

The Special Audit Report on coal purchases by the Lanka Coal Company (Private) Limited for the Lakwijaya Power Plant in Norochcholai was presented by the Auditor General at the request of Parliament’s Sectoral Oversight Committee on Energy.

The report says there was lack of transparency in the manner in which tenders were awarded, there was no proper documentation of the process. It also says there were instances in which important information on procurement had not been made available to the Cabinet of Ministers through Cabinet memorandums.

The AG also questioned if the Ministry of Power and Energy, the Ministry of Power and Renewable Energy, the Lanka Coal Company Ltd., the Ceylon Electricity Board and the Ceylon Shipping Corporation and the Technical Evaluation Committee and the Standing Cabinet Appointed Procurement Committee appointed to carry out these purchases had exercised professional due care in the performance of their duties.

The report concluded that Lanka Coal Company Ltd. was not proved as an essential institution that acted to ensure the least cost and least risk to the Government. As such the relevant parties should carry out an extensive study as to whether this institution should be maintained.

The AG said the report was prepared within the limitations of the mandate, resources and time available to the Auditor General and the examination did not go beyond the scope and examine whether there were illegal or criminal activities on which the Auditor General cannot make any conclusions. It added that if it was perceived that such inquiry should be carried out, the assistance of the institutions specialised in such fields should be sought.

He, however, recommended that officers responsible for the estimated loss, additional cost, loss of income amounting to more than Rs. 4,000 million should be identified and that the procurement process should be made formal to prevent the recurrence of such losses in the future.

“The Procurement Process should be directed to safeguard economy, efficiency and effectiveness in order to safeguard the Value for Money Concept. The authorities concerned should ensure that the Pre-Bid Meetings are held with better effectiveness and through that minimise problems that may arise in the future,” the report said.

By Chandani Kirinde
Sunday Times