Irregularities in coal tenders: Batagoda fires strong missive at CEB Chairman | Daily News

Irregularities in coal tenders: Batagoda fires strong missive at CEB Chairman


CEB’s lack of initiative resulted in enormous losses

Secretary to the Ministry of Power & Renewable Energy Dr.B.M.S.Batagoda has written a strong letter to the Ceylon Electricity Board Chairman Anura Wijepala on a number of irregularities and lawlessness that have continued to dog the tenders awarded to suppliers of coal to the Lakvijaya Coal Power Plant. The Secretary has also said that the CEB’s  lack of initiative in preventing this kind of malpractice has resulted in enormous losses to the country.

Dr.Batagoda says that the CEB Board has to be made aware of the financial losses to the CEB and legal action needs to be taken to redress the situation and restore the losses made by the CEB. He also points out that the officials involved in this fraud needed to be brought to book and disciplinary action had to be taken against them.

The letter, which is copied to the Minister of Power & Energy, Deputy Minister, Presidential Secretary, Secretary to PM, Attorney General,Auditor General, Chairman of the Lanka Coal Company and Chairman of the Shipping Corporation, says that he has time and again pointed out to the CEB that the Lanka Coal Company (LCC) did not have the ability to shoulder

such a big responsibility and the calling for and awarding of coal tenders should have had the CEB’s involvement. Furthermore, he has said that all LCC officials were over 60 years of age and younger employees were needed to handle this job.

Pointing to several instances of negligence by the LCC when suppliers had defaulted, Batagoda says one of the main causes for this was the LCC’s seeming inability to get their suppliers to stick to the rules and regulations set out in the signed agreement, or handle the payments to suppliers in a lawful manner. The Secretary says on several instances the

rules and regulations set out in the tender documents had been altered to suit the supplier subsequent to the tender being awarded.

A fine example of this he says is Nobel Resources who had been contracted to supply 1.9 Million metric tons of coal in 2015 but only supplied 1.6 Million metric tons. The resultant loss to the CEB by this supplier failing to supply the other 300,000 metric tons is estimated at Rs. 12,500 Million. However, LCC has defended the supplier saying that they could not

supply the balance due to the monsoons, a situation that should have been taken into consideration at the time of entering into the agreement.

Furthermore, says Dr. Batagoda, in the case of such a contractual agreement the supplier cannot get away on a flimsy excuse. In order for the supplier to be released from the contract, the matter should have been brought before other invested parties such as the CEB and the Shipping Corporation so that an informed decision could have been made whether to stay with the full contract or not, based on proper evidence. There are no records to indicate such action was taken and the CEB had to bear the loss.

Another instance was the case of Liberty, who was awarded a tender to supply 165,000 metric tons of coal on 10th May 2015 by the Cabinet appointed Procurement Committee. The sulfur and ash content of coal as stipulated in the tender had been altered to Liberty’s benefit, after the tender had been awarded to the supplier. Since this is a totally illegal

act, a financial crime has been committed. However, the CEB has not made any investigation into this matter and paid huge amounts of money to the supplier in an extremely careless way.

This same supplier was awarded a tender by the Procurement Committee once again on 17th September 2015 and again the regulations of the tender and the cabinet approved price index had been altered by the LCC to make wrongful payments to the supplier. The contract that has been signed by the LCC in this instance was not the one approved by the Tender Board but what the LCC has passed off as an amendment to a previous tender which is another illegal act, apart from the unlawfulness of changing regulations of a standard tender after it had been awarded. This has again occurred with

the same supplier on 6th January 2016, where the LCC has again altered the documents to benefit the supplier and caused losses to the CEB, which the Board had carelessly ignored says the Secretary to the Ministry of Power.

The next tender awarded to Adani Global had been another such fiasco says Dr. Batagoda, with the supplier failing to supply 113,883 metric tons out of the contracted 260,000 metric tons, again causing heavy losses to the CEB.

In his letter to the CEB Chairman the Secretary to the Ministry of Power says that 5 out of the 6 tenders awarded by the LCC last year had been filled with controversy and it is evident that the Coal Company officials are unable to understand such things as price indexes or the weather patterns when contracting for coal.

He says that it is due to the weaknesses of LCC officials that the CEB has had to incur such significant losses and in view of this, all future agreements should be thoroughly vetted by CEB’s legal division prior to being signed by both the CEB Chairman and the LCC Chairman. Furthermore, the Finance Division of the CEB has to certify that supplies are as per the rules and regulations of the contract when making payments to suppliers.

Since coal purchases have now caught the attention of the public it has to be noted that whatever decision taken by the Lanka Coal Company and the Shipping Corporation, the final responsibility for their actions would rest with the Government therefore, the Secretary asks the CEB Chairman to ensure that all regulations stated in his letter are followed.


Add new comment