By Ifham Nizam

Plans were afoot by the Power Ministry and the Ceylon Electricity Board top management to give the green light to a higher cost joint venture between China and Pakistan to install a mooring system to unload LNG at Kerawalapitiya, sources close to the Senior Engineers’ Association said.

A senior engineer told the Sunday Island that the CEB was likely to approve it though it was yet under evaluation. “There are strong recommendations from the Power Ministry,” an official said.

When contacted, Ceylon Electricity Board Engineers’ Union (CEBEU) President Saumya Kumarawadu told the Sunday Island that the project should proceed.

He said that it would be taken up at the Cabinet shortly and by the Attorney General’s Department. “I don’t see anything wrong with it as it comes under negotiations and Denmark is also one of the partners,” he added.

He also said that the project comes as a PPA, thus, coming with an investment. “We must go for the three LNG Plants -1,500MW before going to renewable energy,” Kumarawadu said.

A senior engineer attached to the newly launched Senior Engineers’ Association said: “This is the biggest tender fraud in the country, if it is awarded. The value of the contract for Chinese and Pakistan JV is around USD 1.3 billion for 10 years.”

In comparison, he claimed that the cost to CEB from “the New Fortress proposal is USD 250 million for five years.”

Senior Engineers’ Association Officials pointed out that the cost to CEB from the above Pakistan, China JV and pipeline by the same Chinese would cost three USD 3 per One Million Terminal Units (MMBTU). That was double the price of the New Fortress offer of USD 1.4.

CEB tender condition was to install the mooring system for Floating Storage Regasification Unit (FSRU) at a given location with 15 -16 metres depth in the sea.

Many experienced companies who bought the tender documents informed CEB that the location was not suitable for the FSRU terminal and wanted to have the option to change to a stable position.

However, CEB before the bid very clearly said the location of the mooring point cannot be changed.

Therefore, the senior electrical engineer said only two bids were offered and the Technical Evaluation Committee rejected one bid and qualified the JV from China and Pakistan.

The Sunday Island reliably understands that this JV wanted to change the location and TEC considering the possibility.

Since it’s practically impossible to have a mooring system as per CEB location, JV is now offering a small discount to CEB. The earlier price was USD 2.33 /MMBtu and now offered to reduce to USD 2.0/ MMBTU.

“This is a major deviation and violation of tender conditions and procurement procedure.

 While refusing to accept a change, it is now trying to accommodate the request of a preferred party,” he added.

Another engineer said that it will jeopardize the entire procurement process of the country. “It’s unfair for experienced bidders who didn’t want to offer impractical solutions.”

The Sunday Island learns that the Pakistan joint venture partner has little experience and the Chinese partner has none.

Engineers say foreign company’s solution and approach was to remove others and to pressure CEB.

Power Ministry Spokesman Sulakshana Jayawardena said that the project was still under evaluation.