Oddamawadi solar power plant: Tender procedures violated; CEB will lose Rs. 1.39 billion a year
A 100 MW solar power plant at Oddamawadi in Batticaloa has been approved, disregarding the Procurement Committee's (PC) recommendation that a unit of power should be bought for USD 6.66 cents. Instead, a unit will be bought at USD 8.75 cents.
The solar power plant contract will be awarded to Solar Forge Batticaloa based on a decision made by the Cabinet last week.
The Sunday Times learns that due to this price difference of a unit of power, the Ceylon Electricity Board will have to bear an additional cost of Rs. 28.6 billion over 20 years, or Rs. 1.39 billion a year.
A CEB official said Solar Forge Batticaloa was selected for this 100 MW project without following any international competitive open tender procedure.
According to the Cabinet Paper seen by the Sunday Times and which was submitted by Power and Energy Minister Kanchana Wijesekera on March 1, this project has been awarded to Solar Forge Batticaloa based on an Expression of Interest (EI) presented for the construction of renewable energy.
Meanwhile, since Solar Forge Batticaloa has paid Rs. 100 million to obtain an energy permit from the Sri Lankan Sustainable Authority (SEA), the minister has requested the Cabinet that the investor be exempted from providing bid security (proposal security) to the CEB.
“SEA and CEB are two separate institutions, and Energy Permit and Bid Security are also two different requirements. The CEB obtains bid security in case, for whatever reason, the investor halts the project in the middle of the job because of the possible risk and loss to the country. It could be around 1% of the investment. However, the minister has removed this requirement from the Cabinet Paper,” the CEB official alleged.
The Standing Cabinet Appointed Negotiation Committee (SCANC) has recommended that a unit of power be bought at USD 8.75 cents, which is more than USD 2.06 cents specified by the PC. The investor had demanded 9.78 USD cents per unit of power.
Despite the Procurement Committee having participated in talks carried out by SCANC, it had expressed objections to increasing the unit price by USD 2.06 cents, the CEB official said.
Against this backdrop, the Procurement Committee has sent a report, including its figures, to Power and Energy Ministry Secretary Dr. Sulakshana Jayawardena.
The Ministry Secretary confirmed that he has received a report from the PC.
According to the Cabinet paper, Cabinet approval has been granted for a 20-year operational period on a Build, Own, and Operate (BOO) basis.
The CEB Engineers’ Union (CEBEU) said that during an international, competitive, open tender process, tenders submitted were subject to an evaluation by a technical evaluation committee to find out initially whether they were commercially viable. Only if it is so will an evaluation be carried out to find out whether it is technically viable. If the tender succeeds in both procedures, CEBEU pointed out that only then will an evaluation be done to determine if it is financially viable.
“Though this is time-consuming, it is a proper, responsible procedure. Since tenders are connected to public finances, the entire procedure should be carried out based on procurement guidelines. However, anyone can submit Expressions of Interest (EI). During this, the investor’s ability, experience, history, and the state of equipment are not taken into account. These proposals are given priority on political requirements,” a CEBEU spokesman said.
According to the Sri Lanka Electricity Act No. 20 of 2009, tenders have to be called for the construction of power plants with more than 10 MW.
However, amidst strong objections from many factions in the power sector, in mid-2022, the government submitted amendments to the Sri Lanka Electricity Act No. 20 of 2009 and the Sri Lanka Sustainable Energy Authority Act No. 35 of 2007.