Cabinet advice sought on stalled Sri Lanka 300MW IPP tender: minister
ECONOMYNEXT – Sri Lanka’s power ministry has sought cabinet advice on a stalled tender for a 300MegaWatt dual fuel power plant that is needed to avoid a looming crisis in two years, Deputy Minister Ajith Perera said.
Second round bids were seen by a technical evaluation committee and a cabinet appointed tender board, and eventually a decision had been made that all the bids were non-responsive due to various reasons, Perera told parliament.
The Power Ministry has sought advice from the cabinet of minister for the next step, he said, without elaborating.
The bids to build and operate the independent power plant (IPP) were submitted on a so-called ‘two envelope’ basis where technical and financial proposals (price) are given separately.
According to reports six out of eight bids were deemed substantially responsive by a technical evaluation committee.
But the cabinet appointed tender board, which would usually open price proposals and make a decision, had then controversially decided that only one, a Korean bid, was technically acceptable, eliminating the competition.
However the second envelop reportedly did not contain a proper price on the prescribed basis, stalling the tender.
Unconfirmed reports said the variable unit price of the chosen plant which could be gauged from the ‘heat rate’ or efficiency of the plant in the technical proposal of the single bidder, was much higher than competing plants.
There are some expectations that the cabinet may give the go ahead for price envelopes of the other five bidders, who were recommended by the technical evaluation committee, to be opened.
Such a move will avoid the need for a re-tender and delay of at least 8 months.
In the past when planned plants were delayed, either due to political interference or corruption allegations, emergency power has been procured at even higher prices.
The 300MW plant is to be capable of burning both diesel and liquefied natural gas (LNG), which is cleaner than coal but more expensive.
However there is no terminal to import and store LNG leading to a widespread view that the dual fuel capability was a ruse bring to bring in a diesel plant.
Perera admitted that it was a reasonable fear, since there was no LNG terminal and based on past experience with another 300MW plant.
But permission had been given to both the state-run Ceylon Electricity Board, and an India-Japan joint venture to build a terminal, he said.
An LNG terminal should ideally be built by a third party and not the CEB analysts say.
Sri Lanka’s state-run Ceylon Electricity Board was to have built a joint venture 500MW coal plant in Trincomallee in northeast, with India in time to avoid power cuts but the project was delayed amid haggling over the heat rate and shifting sites.
The current administration cancelled the 500MW plant, leading to criticism that it was playing up to the so-called renewable energy and diesel ‘mafias’. (Colombo/Aug21/2017)