News

105 MW Kelanitissa gas turbines: Tender cancellation comes under fire

  • Awardee appeals to Power Ministry

  • CEB to re-tender project

 

Allegations have been levelled against the Ministry of Power for the cancellation of a tender awarded during the tenure of the former United National Front (UNF)-led Government to design and manufacture gas turbines supplying 105 MW at the Kelanitissa Power Station on the basis of erroneous facts.

In an appeal made by the tender awardee, the China National Technical Imports and Exports Corporation (CNTIC), to Secretary to the Ministry of Power Wasantha Perera, it is stated that the CNTIC was selected by the Technical Evaluation Committee (TEC) as the “lowest evaluated, technically, substantially, responsive bidder” for offering a price that is Rs. 2,000 million less than the second evaluated bidder, M/S TSK Electronica Y-SA in Spain.

In the letter written by Attorney-at-Law H.H. Anura Chandrasiri, on behalf of the CNTIC to Ministry Secretary Perera, it is stated that the recommendation to cancel the tender, after the finalisation of the technical evaluation and after the receipt of the TEC recommendation by the Standing Cabinet-Appointed Procurement Committee (SCAPC), had been made based on the recommendation of the SCAPC. It further notes that being the Secretary of Power and also a Member of the SCAPC, he was been misdirected to rely entirely on the statement “People’s Bank (PB) requesting a Treasury Guarantee” made by the former General Manager of the Ceylon Electricity Board (CEB) for this captioned project at the SCAPC meeting held on 11 September 2020.

In its appeal, the CNTIC has requested the Ministry Secretary to rectify the issue, as it claimed that the cancellation of this competitive tender after the selection of the successful bidder – without any valid reason but based on an uncorroborated, unjustified basis – amounts to the constitution of an act that shall be ultra-vires before the law.

The tender has been cancelled by a decision taken by the Cabinet of Ministers on 19 October 2020. In the same cabinet decision, it had been decided to re-tender the procurement under supplier’s credit.

In a letter dated 15 January 2021, written to the CEB Chairman and Managing Director, Additional Secretary to the Secretary of the Ministry of Power D.P. Wickramasinghe stated that the Ministry submitted the cabinet memorandum requesting approval to re-tender the procurement or a Treasury guarantee to secure Rs. 113 million from People’s Bank, based on representations made to the SCAPC, and further informing, in response to the CEB General Manager’s letter dated 18 August 2019, that the CEB was unable to find the necessary funding without a guarantee from the Treasury.

Nevertheless, in the same letter it is stated that the People’s Bank Chairman had informed the Ministry that the bank was willing to consider providing fund assistance to the CEB for this procurement, if a request is made by the CEB. It appears from this letter that the CEB has not made a formal request from People’s Bank.

In its response to the Ministry, the CEB had stated that its board took a decision to re-tender on supplier’s credit, considering the financial situation of the CEB.

It is stated that it was unlikely that the CEB would be able to secure the necessary finances from a local financial institution due to the present adverse financial position of the CEB and alternative financial options needed to be explored. Therefore, to call offers from the two shortlisted bidders to provide supplier’s credit financing to fund the full cost of the procurement would lead to unnecessary legal issues, further delaying the implementation of the project.

However, when contacted by The Sunday Morning, CEB Chairman Eng. Vijitha Herath noted that due to the financial situation of the country, as well as of the CEB, the Board has decided to re-tender the project.

“We will call for tenders immediately and the process will be completed soon,” he said.