Kerawalapitiya LNG plant tender: Korean consortium appeals

The proposed award of t he Kerawalapitiya 300MW Liquefied Natural Gas ( LNG) power plant tender to Lakdhanavi Ltd, has been referred to the Procurement Appeals Board ( PAB) by a consortium comprising Samsung C& T, Korea Midland Power Co. (KOMIPO) and GS Energy.

The consortium, in its appeal to the PAB earlier this month, opposed the recommendation of the Standing Cabinet Appointed Procurement Committee ( SCAPC) to award the tender to Lakdhanavi, which is a subsidiary of LTL Holdings (Pvt) Ltd which, in turn, is a subsidiary of the State- owned Ceylon Electricity Board (CEB).

The award of this tender for the 20-year Build, Own, Operate and Transfer (BOOT) project was initially delayed for 18 months, and is now likely to be further deferred. Initially, there were differences over the alleged opening of the Samsung JV Korea Group’s financial bid, without considering the offers of 7 other firms. But now, the Korean consortium is up in arms over the decision to award Lakdhanavi the project.

In its appeal, the Korean consortium maintains it was the only qualified bidder after the second stage of the technical evaluation, and that, all other bidders did not comply with the technical requirements.

The tender is for a combined cycle power plant powered by dual fuel. This means it should be able to run on liquid fuel and regasified LNG ( RLNG). It must not be confined to one. However, none of the other bidders’ plants were designed to facilitate an RLNG operation, even two years after completion of the power plant, the consortium states.

It maintains that the other bidders have not factored in fuel gas receiving facilities necessary to operate the combined cycle power plant on RLNG. The financial bid would, therefore, be substantially affected and “reduced most unfairly when something as important and critical as an entire fuel gas receiving facility is simply not factored into the bid”, the consortium points out. LTL Holdings had submitted the lowest bid at US$ 160 million.

The Korean consortium’s commercial proposal was disregarded “because of a really trivial document error”, its appeal observes.

At the opening of the financial bids in August 2017, the relevant CEB official was unable to access the pen drive that had been submitted by the consortium. He also refused to peruse the contents of the pen drive using the laptop computer of the consortium’s formal representative.

The appeal also highlights a conflict of interest in Lakdhanavi, in which the CEB has a strategic holding, participating in such tenders. It states that the nexus between the two, accords an overwhelming advantage to the bid submitted by Lakdhanavi, to the grave prejudice of other bidders. A 2nd bidder, GCL Windforce & RenewGen, has also lodged an appeal with the PAB against the tender. It is learned that this party also objected to the conflict of interest.