New Fortress Energy ‘broke and corrupt’

• CEB engineers highlight US company’s rating
• Claims Yugadanavi deal ‘illegal and irregular’
• Commences work-to-rule, threatens escalation

BY Pamodi Waravita

The Ceylon Electricity Board (CEB) Engineers’ Union (EU) accused the Government yesterday (25) of making an irregular deal with the US-based energy company, New Fortress Energy Inc., which they claim is “broke and corrupt”, and said that they would escalate their trade union action if their demands are not properly met by the Government.

“We started our work-to-rule trade union action yesterday. We will escalate it, which would inevitably cause major inconveniences to the public, if our demands are not properly met. Our main demand is that the Government not proceed with the illegal and improper deal with New Fortress Energy Inc. This company is a corrupt and bankrupt company. Fitch Ratings gives it a ‘BB-’ rating,” said CEBEU President Eng. Saumya Kumarawadu at a press conference held yesterday.

Accordingly, the CEBEU said its demands are that the CEB not proceed with the improper and illegal New Fortress Energy Inc. liquefied natural gas (LNG) deal, and that the CEB prevent the politicisation of the post of the CEB General Manager and stop the abrupt transfers of CEB senior management personnel.

In a press release issued in September 2021, New Fortress Energy Inc. said that it would acquire 40% of the shares of the 310 MW Yugadanavi Power Station in Kerawalapitiya and that as part of the agreement, it would also provide about 1.2 million gallons of LNG to the Government per day through a LNG terminal which will be built off the shores of Colombo.

Earlier this week, Fitch Ratings affirmed New Fortress Energy’s “BB-” long-term issuer default rating (IDR) and “BB-”/“RR4” senior secured debt with the rating outlook being Stable. The Fitch Ratings’ “BB” rating generally indicates an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time, while concurrently noting that business or financial flexibility exists to support the servicing of financial commitments.

In its commentary, Fitch said that the New Fortress management’s aggressive growth strategy has significant execution risk, with construction, regulatory, and jurisdictional issues. The new assets increase the cash flow under long-term contracts but the pace of the development and completion of the projects dictates the improvement in business risk and cash flow stability.

S&P Global Ratings also rated New Fortress Energy Inc. as “BB-” recently.

The Morning reported last week that the CEBEU, in a letter addressed to the CEB management, threatened trade union action over the sudden transfer of CEB Additional General Manager (AGM) – Transmission Eng. G.J. Aluthge, a key figure in making decisions with regard to the supply of LNG to the country, including in matters pertaining to the recent controversial agreement with New Fortress Energy Inc.

The CEBEU said yesterday that officials who refuse to work outside the law are being threatened with transfers, which is a threat to all honest officers who are working within the institution.

The letter by the CEBEU further claims that CEB General Manager Eng. M. Ranatunga “supports the illegal New Fortress Energy Inc. deal”, and has accused him of undermining the efforts of the CEB to procure LNG competitively.

“By taking further steps in violation of the established rules in the CEB, which also adversely affects our individual members, you (a reference to Eng. Ranatunga) have extended your conduct to a level that we cannot tolerate any further. It appears that you are merely acting under the dictation of the CEB Board, probably to please present CEB Chairman M.M.C. Ferdinando, to secure any benefit beyond your scheduled retirement on 12 January 2022.”

The CEBEU has also demanded that the CEB not stop the ongoing transparent tender procedure by the CEB for LNG deployment and that the CEB stop the attempts of dismantling the CEB and to cease the proposed amendments to the CEB Act No. 17 of 1969.

In its letter to CEB General Manager Eng. Ranatunga on Tuesday (24), the CEBEU mentioned that even though the trade union action could lead to intermittent power outages and their prolonged recovery, maximum efforts will be taken to minimise the effects to places like hospitals and places of importance to national security.

Further, if a favourable response in meeting their demands is not seen within the reasonable and shortest possible time, they will be compelled to escalate this trade union action to level two, where even breakdowns and emergency situations will not be attended to after normal office hours.

“The Power Ministry and the Government should take full responsibility for the possible difficulties faced by the general public due to this trade union action. However, the CEBEU will not be liable for any failure or inconvenience caused to the public during this trade union action of exercising our legitimate rights,” the CEBEU warned.

The New Fortress Energy deal has received much criticism over the past month, as it has allegedly been acquired outside of the proper tender procurement process and without proper cabinet approval.

The Central Bank of Sri Lanka (CBSL) announced on 26 October that the Government is set to receive a $ 250 million inflow from the partial divestment of the Yugadanavi Power Station to New Fortress Energy Inc. and that the first tranche of the same is expected in November and December 2021. However, allegations levelled against the deal claim that the long-term loss to Sri Lanka through the deal is around $ 6 billion and also cite threats to the country’s energy security.