COPE questions Ceylon Coal Company officials on Rs. 1.1 billion loss

A probe by the COPE (Committee on Public Enterprises) yesterday found that a loss to the tune of Rs. 1.1 billion had occurred due to the non-specification of the quantity of coal required when calling for tenders for the purchase of the raw material by the Ceylon Coal Company (Pvt) Limited.

The Ceylon Coal Company (Pvt) Ltd. had purchased coal on a short-term basis without following the proper procurement process, the COPE was informed at its meeting at the Parliamentary Complex with its Chairman Prof Charitha Herath presiding.

COPE members Ministers Mahinda Amaraweera, Mahindananda Aluthgamage, State Ministers Nalaka Godahewa, Sarath Weerasekera, Ajith Nivard Cabraal, MPs Patali Champika Ranawaka, Eran Wickramaratne, Jagath Pushpakumara, Premnath C. Dolawatta, S.M. Marikkar and Rauff Hakeem were present at the meeting.

A group of senior officials of the Ceylon Coal Company Ltd had been summoned to respond to the queries of the COPE probe. They told the committee that they had expected to take the advantage of the fluctuations in market prices by purchasing coal on a short-term basis.

COPE Chairman Herath pointed out the need to handle tenders with the approval of the Cabinet of Ministers in accordance with the prescribed procurement process.

The Norochcholai Lakvijaya Power Plant was added to the national grid to meet a 900 MW electricity requirement, but there was a shortfall of 90 MW, the COPE was told.

It was also revealed at the meeting that only 810 MW was actually being generated and that 90 MW shortfall was unavoidable.

Secretary of the Cabinet Procurement Committee had been absent from the Procurement Committee meetings on eight occasions and an Additional Secretary has been appointed for the purpose. Therefore, the COPE Committee noted that there was a problem with the legitimacy of decisions taken. However, officials said that it was possible to appoint an Additional Secretary for the purpose. The Chairman recommended submitting an immediate report to the COPE to ascertain whether this was correct.

The committee asked why three barges purchased by the Ceylon Electricity Board at a cost of Rs. 1100 million had been handed over to the Sri Lanka Navy. The COPE directed the Secretary to the Ministry to submit an immediate report on the procedure followed in handing over the barges and the reasons for their inability to maintain them.

The newspaper advertisements had said that five years’ experience in coal supply was required for the supplier, but applications had been issued to companies with only three years’ experience. The committee was of the view that it had put the coal company at a disadvantage. It also said no formal procedure had been followed on the last day of bidding. The Committee decided that those matters should be duly investigated.

The COPE asked whether the involvement of the Sri Lanka Shipping Corporation in the purchase of coal would result in a loss than the purchase of coal through another institution under the normal tender system. It recommended submitting a report in that regard.

The COPE noted the need for regular meetings with the Ceylon Electricity Board, the Ceylon Shipping Corporation, the Ceylon Coal Company and the relevant ministry and its members to draw their attention to the cost of operating thermal power plants.

The COPE Chairman instructed officials to submit all reports on these matters within one month.