LNG power plant tender: Tug-O-war continues | Sunday Observer

LNG power plant tender: Tug-O-war continues

An aerial view of the Combined Cycle Power Plant at Kerawalapitiya
An aerial view of the Combined Cycle Power Plant at Kerawalapitiya

Countering the views of Power and Energy Ministry Secretary Dr. B.M.S. Batagoda that Lanka Transformers Limited (LTL Holdings) is not capable of operating a Liquified Natural Gas (LNG) plant at Kerawalapitiya, officials of LTL Holdings told journalists that the company is ready to operate a LNG plant any time and that it is well geared for the task.

Lakdhanavi Ltd., a State owned entity and a subsidiary of LTL Holdings which operates the Yugadanavi 300 MW combined cycle power plant at Kerawalapitiya, was not granted the contract to construct the 350 MW LNG plant by the Power and Energy Ministry following a report submitted to the Procurement Award Board (PAB) by Dr. Batagoda despite the State owned entity being the lowest bidder.

LTL Holdings Chief Operating Officer Dammika Nanayakkara said the power plant at Kerawalapitiya is LNG enabled and it is matter of knowing the input conditions based on supply pressure need and having safety valves installed.

“We categorically deny all accusations made by the Ministry Secretary as baseless. The company is prepared to debate the matter to prove our capability and rubbish the claims as a futile attempt to deny us the contract to operate the LNG plant,” Nanayakkara said.

When asked whether the company would go to courts on the denial of the contract to install the plant, a top official of the company said they will not hesitate to seek legal redress as it is unlawful to deny a contract to the bidder that makes the lowest bid.

Experts in the energy sector said to award the contract to a foreign company when a local company which is also a State owned entity, is the lowest bidder is a contravention of the provisions of the Ceylon Electricity Board Act. According to provisions of the law, 25 percent of the shares should be vested with the government or in an institution affiliated to the government for power plants generating over 25 MW.

“There is a clear contravention and deviation of the provisions of the law by denying the award to our company which as adhered to all requirements of the tender procedure,” Nanayakkara said. Had there been a proper transparent tender procedure we would have commenced work on the plant in September last year.

Lakdhanavi was the lowest bidder with a bid price of Rs. 14.98 per unit while the Chinese company offered a bid price of Rs. 15.97 a unit.”

He said It is a costly to store LNG as it requires vast energy to store at minus 160 degrees Celsius.

“The power plant at Kerawalapitiya is LNG enabled and the company is well geared to operate a a LNG plant,” he said. Energy Ministry Secretary Dr. Batagoda when contacted said that the LTL company has been lying to the country on its contracts by violating the agreements on several occasions and questioned how could contracts be awarded to such a company which breaches the agreement.

“With regard to the agreement with West Course Power Plant of LTL Holdings, the company was bound to reduce the unit price after one year of operation, but the company did not do so. If the company says it can offer power produced at the LNG plant at Rs. 14.98 per unit, why can’t it give electricity generated at the combined cycle power plant at the same price?

“On average for the seven years it operated the plant in Kerawalapitiya it has charged Rs. 32 per unit, whereas the price of an emergency power unit has been Rs. 28. LTL Holdings wants to grab all the contracts and pushing aside all other bidders,” Dr. Batagoda said. How could the company be given the contract when the technical committee had rejected LTL’s bid twice, he queried. Regarding the decision to award the contract to the Chinese company he said no decision has been taken as yet as it is the Cabinet that would finally decide as to who should be awarded. However, LTL sources say the decision to hand over the project to the second lowest bidder, Concord Holdings and its local partner WindForce & RenewGen, has been taken.