The proposed 300 MW Combined Cycle Kerawalapitiya power plant may see the Cabinet Committee on Economic Management asking for a fresh tender this week.
A government source yesterday indicated to the Sunday Observer that it will be quicker to call for a fresh tender with strict time limits than allowing the current controversial bid, which has now come under criticism by the highest in the land, “to go through the Procurement Appeal process – in which it will inevitably end up.”
The controversy is over an agreement that the bidders say was reached after the tender was called, at a pre-bid conference, where the government had allegedly agreed to consider bids where the plant will be run for two years on diesel or furnace fuel before being converted to (Liquified Natural Gas) LNG. This clause, the bidders claim, was included because the Ministry agreed that a considerable period will elapse before an LNG terminal can be built. The construction of the terminal was part and parcel of the original tender.
“The groundwork for this LNG plant was initiated as far back as July 2015 and has faced many obstacles and criticism which has only resulted in dragging this project without implementation. This is something that the country needs to face daily demands in light of decreasing hydro power generation,” a senior official from the Ministry of Power and Renewable Energy told the Sunday Observer.
A technical requirement the bidders had to fulfill included that the plant be equipped with the facilities to cater both diesel and LNG from the go. However, seven companies had only provided for a diesel power plant. The technical evaluation committee had disqualified them, despite the agreement reached at the pre-bid conference that the tender committee will consider a diesel plant, which can be converted to LNG at a future date, bidders claim. There had also been other conditions within the seven disqualified bids, which would have disqualified these bidders, if one does not consider the diesel only option as a disqualification, the senior official said. However, one of the disqualified bid is over a shortfall of the output – the tender had called for a 214MW output while one company had only provided for a 200MW output.
“The bidding process was done under three stages; commercial evaluation, technical evaluation and the financial evaluation. All companies passed the commercial evaluation however, seven companies failed at the technical evaluation stage. Therefore, only Samsung Korea has qualified to be evaluated for the financial head. If the pricing formula that they have provided is not acceptable to the tender board we will have to call for fresh tenders,” the senior officer said.
The de-coupling of the generating plant and the LNG terminal has also come in for sever criticism from the other government bodies.
“This can lead to a price mismatch. We asked for a consolidated project so that the same bidder provides for the terminal and the generating plant. This will achieve economy of scale, better control of the process and price stability as you are only dealing with one party. But with the present tender, the terminal will be done by one party and the generating plant by someone else,” a senior officer attached to a government monitoring agency told the Sunday Observer.
Meanwhile the Director General of the Public Utilities Commission of Sri Lanka (PUCSL) last week warned that the Kerawalapitiya Liquid Natural Gas (LNG) plant would need to be started soon if they are to keep to the CEB’s timeline of commissioning it by 2019.
The PUCSL has continuously warned that the country would face an energy crisis soon if they did not keep to the approved generation plans and implement what has been proposed.
Over the last 20 years, the country has had to resort to diesel and thermal power plants to meet increasing power needs as the long-term power plants proposed for over 20 years have not materialized.
Earlier this month, cabinet spokesman Minister Rajitha Seneratne said the Indian Government is willing to consider matching the proposal given by Korean Government for the LNG plant. As reported elsewhere, this proposal followed a meeting President Maithripala Sirisena had with the Indian High Commissioner where the Indian Government has agreed to consider rates in the Korean proposal, which Senaratne termed as ‘favourable’ to Sri Lanka.