Coal Mafia in Sri Lanka

by Charminda Rodrigo
Courtesy: Ceylon Today

( January 23, 2017, Colombo, Sri Lanka Guardian) Former Chairman of Lanka Coal (Pvt.) Ltd Maithri Gunerathna said, “Just a week ago Lanka Coal (PVT) Ltd (LCL) floated the tender to purchase 2.2 million tons of coal for 2017. It was obvious that keeping me in the position would cause a serious effect on their income. So I was sacked”.
Excerpts:

?You were removed from the chairmanship of Lanka Coal (PVT) Ltd (LCL) last week. What were the reasons behind this drastic decision?

A: There were serious allegations in connection with the purchase of coal during the Mahinda Rajapaksa regime. The election manifesto of President Maithripala Sirisena had pledged to streamline the purchasing mechanism of the government, especially coal, to make it more transparent than what it was before. For some reason or the other the President chose me as the Chairman and Minister Champika Ranawaka appointed me to the post. When a new minister was appointed to the Ministry of Power and Energy in August 2016, the President insisted that I should stay on as the Chairman of LCL. From the time I started my work , I had to clean the stables. There were no proper regulations or procedures in place for purchasing coal. I adopted a 360° approach when discharging my duties. I had discussions with my staff as well as the suppliers. I paid attention to all their comments and feedback to set the procedures right to achieve the organizational objectives. I suggested that we should go for ‘pre-bid’ meetings, so that it would give an opportunity for suppliers to raise all their concerns before they furnish the bid documents.

?There was much concern about the recent coal tender. What was the reason behind it?

A: The recent tender too was done in the same way. Eight parties were competing in the tender, out of which four suppliers were rejected by the Technical Evaluation Committee. I wrote a letter to the Treasury to draw their attention to the fact that this should be an inclusive tender. I got the approval to include two more contenders and increased the number of bidders to six. Tenders should always be open to many. Under normal circumstances the competition tends to bring the price down in tenders. However, I have observed that there were manipulations to limit the number of bidders. All this is done out of design. The process itself needed an overhauling. I took some drastic action to rectify it.

?What was the procedure followed in this tender?

A: LCL merely acts as a post box. We call for tenders and the specifications are set by the line ministry. We collect the bid documents. We collect any other documents which should be furnished along with the tender. Then we submit the entire set of documents to the Technical Evaluation Committee (TEC) for their perusal. We have no stake in the process of the TEC. The process is designed in such a way to preserve transparency in its conduct.

?Who appoints members to the TEC?

A: Members to the TEC are appointed by the line ministry comprising members from various institutions such as the Ceylon Electricity Board (CEB), Lanka Coal and Ministry of Power and Energy. It comprises specialists in the subject area. All of them are State employees. There is no fault surfacing in connection with the process.

?What happened after the TEC filed their report?

A: Once the TEC completes its evaluation process, the final report is submitted to the Special Cabinet Appointed Procurement Committee (SCAPC). The SCAPC has to provide the reasons if they intend to reverse the decision of the TEC.

?Who sets the specifications when tendering coal procurement?

A: Ceylon Electricity Board (CEB) decides the quality standard of the fuel they intend to purchase. We have no involvement in that process.

?So whats the issue in this particular tender?

A: In this tender Nobel Resources (Pvt.) Ltd, a company which supplied coal during the previous regime has also participated. They were the lowest bidder. Having participated, evaluated and pronounced as the lowest bidder they were called by the SCAPC for a discussion. So the company officials had gone to meet the SCAPC and reclaimed their right to claim. SCAPC had proposed to negotiate the bid even after all the formalities had been fulfilled. After the meeting SCAPC remained silent for two weeks.
In the meantime, the fifth lowest bidder wrote directly to SCAPC, especially to the Secretary of the Ministry, requesting to amend the specifications to accommodate his bid. This is a tender called as per the specifications set by the CEB and the entire work had been already done to award it to the lowest bidder. So a directive had been issued to the TEC to re-evaluate the tender without paying respect to two conditions out of the required specifications.

So the TEC initiates another round of evaluation upon the directive of the secretary and determines the earlier 5th lowest bidder’s bid as the lowest. All this is done when a tender process is underway.

?Has the tender been cancelled or recalled withstanding the change in re-evaluation criteria?

A: All this is done when the tender process is going on. Also SCAPC’s discussion with the lowest supplier has not reached a conclusion.

SCAPC got a letter on Friday from the 5th lowest bidder to change the criteria. The secretary ordered the TEC to disregard two conditions and rerun the process. TEC reverted to the final report on Tuesday of the consequent week and awarded the tender to the earlier 5th highest bidder on Thursday. All this takes only six days to process. In the meantime the rigmarole was going on and I got a letter. I think by mistake with the SCAPC minutes in connection to change of criteria in evaluation. I wrote to them in a letter on 2 July 2015, requesting not to deviate from the procedure for the simple reason that it is against the State procurement guidelines. Clause No 5.5 of the bid document very clearly states that the bidders cannot influence any official or process. This is against the all known procedures in procuring. I stressed the fact that this could bring a grave disrepute to the government.

?Was this letter sent before entering the final decision?

A: Yes, well before the decision was taken and I copied the same letter to all the members of the SCAPC.

?Whats the difference between the bid values submitted to LCL?

A: The amount quoted by the 5th highest bidder was US$10 higher than price quoted by the lowest bidder per ton.

?What happened afterwards?

A: They disregarded my opinion and complained to then Minister of Power and Energy Champika Ranawaka, that “Chairman of LCL is writing unnecessary letters”. The minister discussed with me in this regard. I requested him to keep LCL in light always when drafting Cabinet papers in this regard and also explained to him the deceitfulness of the officials of his own ministry. However, the tender was awarded to the earlier 5th lowest bidder.

Afterwards, all the other bidders have gone to the Procurement Appeal Board (PAB) of the President to lodge a complaint against the manipulation. PAB recommends the Cabinet to immediately cancel the tender and re-announce it internationally after making certain changes to the bid document, if necessary.

Shockingly the higher officials of the ministry submit a Cabinet Paper without paying any attention to the recommendations of the PAB or my ardent request to Minister Champika Ranawaka.

The bidders have later on resorted to the Supreme Court to seek justice to their plea of deprivation.

?The final report of the Auditor General on this subject states under Section 92 that necessary actions have not been taken to support the Cabinet when the ministers have entered the decision?

A: LCL does not deal with the Cabinet. We always go through the proper channel which is the Secretary of the Ministry. The observation has no relevance to LCL.

?Can you say the ministry officials have acted mala-fide during the process?

A: Yes of course. They have manipulated the process for very suspicious reasons.

?What was the SCs view on the matter?

A: The SC had carefully studied the case in full. The Bench presided over by the Chief Justice had pronounced a strong judgment against the Cabinet decision taken with respect to the misleading facts submitted to them when obtaining the approval.

?Has the official honoured the judgment of the SC?

A: Not at all. That’s why they have pulled the strings to remove me from my position. The letter I sent to the members of the SCAPC had been re-produced along with the judgment due to the validity of the points I made to the members of the SCAPC. The judgment very clearly states SCAPC is going about with the request made by the 5th highest bidder without cancelling the bid as per Section 5.5 of the bid document was an over utilizing its power and a palpable error.

The SC had directed the third respondent that is the chairman of the LCL may terminate the contract to award the tender to the earlier 5th highest bidder. The officials have clung on to the word ‘may’ and later sought the opinion of the Attorney General (AG) to interpret the judgment delivered by the SC.

The counsel at the AG’s Department cannot interpret the judgment of the SC, but the SC itself. However, the Attorney General’s Department instructs to further retain the tender awarded to the 5th lowest bidder until such period and consequently to conduct a fresh tender.

?What was the decision of the Cabinet?

A: The minister opposes this decision at the Cabinet and in response the Prime Minister directs the issue to the Cabinet Economic Subcommittee. I received a Cabinet decision simultaneously directing me to award the tender to the 5th lowest bidder, with two clauses included in the specifications not regarded during the TEC process. As the Chairman of LCL I complied with the Cabinet decision and simultaneously complained the flaws of the decision. I had the courage to do the right thing and put all these in my letter sent to the relevant authorities.

?So, what paved the way to your removal?

A: Just a week ago LCL floated the tender to purchase 2.2 million tons of coal for 2017. So it is obvious that keeping me in the position would cause serious effect to their income. So I was sacked.

?Dont you think the specifications of a commodity should be evolved as per the industry condition?

A: Yes. But in this instance it was done during a tender. It is the duty of the CEB to set the new standards after a careful study.

?In the report the Auditor General says, “The transportation of coal should be tendered to preserve the transparency”. What does this mean?

A: This is partially correct. The Cabinet had taken a decision to sublet all the transportation activities to Ceylon Shipping Lines (CSL) since it is a government subsidiary. We suggested calling for tenders on CIF and FOB basis. We requested the bidders to match the price of CIF in freight and barging. We still gave the shipping to CSL.

?What made the officials to have a grudge against you?

A: I did all this with honest intentions. However, we should understand there is a mafia operating in the industry. They tried to single me out when I was a threatening obstacle in their eyes. They have humiliated me by publicly stating that I have affiliations to Nobel Resources (Pvt) Ltd. There were some adverse statements made in Parliament by some members. Since I have never got a ‘Nobel Price’ it does not affect me.

?Are you a board member of the Nobel Resources (Pvt) Ltd?

A: Not at all. I have no affiliation to any of the suppliers. This is a story the people who wanted to remove me spread.

Author: Sri Lanka Guardian

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