ECONOMYNEXT – Following a report by Sri Lanka’s auditor general’s department, the parliamentary Committee on Public Finance (COPF) has recommended that action be taken against officials who oversaw a 2022-2025 coal tender for the Norochcholai coal power plant.
Minister of Power & Energy Kanchana Wijesekara shot back in parliament on Tuesday October 04, asking the committee to hear out the officials’ version of events before making recommendations.
“The Auditor General has reported that the tender to procure coal for the Norochcholai power plant from 2022 to 2025 did not follow the approved procurement process,” COPF chairman and opposition MP Harsha de Silva said speaking in parliament.
“The objective of the procurement process, which is giving the maximum equal opportunity for the firms that are qualified and interested parties to participate in the tender, has been broken.”
The company that was awarded a contract to supply coal on credit has refused to go ahead until legal clearance is given after the deal ran into controversy and some activists went to court.
Black Sands Commodities FZ LLC based in the UAE was given the deal to supply 4.5 million tonnes of coal from Vanino Port, Russia.
It was supposed to supply coal at a base rate of 295.22 US dollars and 33 dollars a tonne for freight.
The deal was supposed to be for seasons 2022-2023, 2023-2024 and 2024-2025. Critics have said the price was too high.
However, after Black Sand Commodities FZ-LLC was awarded at 328 dollars per tonne of coal, a consortium of Brown Investment and China Machinery & Engineering Cooperation (CMEC) came up with another bid and said it could supply coal from $285-$290 per tonne.
In early September, COPF agreed to conduct an investigation into the case following a request by Minister Wijesekara who said false allegations leveled against the awarded tender had led to questions of transparency and pricing.
“This coal tender was called and was awarded to Black Sands. The issue was this company was not a registered company. The registered company was a company called Suek AG,” said de Silva.
“Then how was the tender awarded to an unregistered company? This is beyond our spectrum therefore we called in the Auditor General.”
Tabling the final report of the AG, de Silva said it was made after discussions with the Ministry of Finance and the Secretary to Ministry of Energy and Petroleum.
During the audit, the tender that was awarded to Black Sand was canceled and the Lanka Coal Company called for a fresh international tender to purchase coal on September 23.
Based on the AG report and discussing it with the members of COPF, de Silva said, the committee recommended that the officials involved in the procurement process should be banned for at least a year from going into another procurement process.
“This is the recommendation. Whether to implement it or not is with the government and the ministries. But I would ask the government to agree to implement these recommendations,” said de Silva.
However, objecting to the recommendation, Minister Wijesekare said there were limitations when conducting the audit and the officials who participated in the procumbent process had offered an explanation to the auditor general which must be considered by the committee.
“In the AG report, he has mentioned limitations of his report, such as not being able to do a broader analysis of the incident due to limited time, applying only to the 2022-25 coal purchase, not being able to find the details of internationally registered firms, and lack of time to analyse the information of the firms,” Wijesekera told parliament on Tuesday (04)
The committee should listen to the officials rather than make recommendations that could unfairly implicate those who participated in the procurement.
Replying to the inister, de Silva said COPF will no longer intervene in the case and further investigation should be done through the Committee on Public Enterprises (COPE) and Committee on Public Accounts (COPA).
“We have only made recommendations. We have no authority to implement this. We are not going to intervene in this anymore. COPE and COPA are being appointed now, and this should be handed over to them,” he said. (Colombo/Oct04/2022)