Litro Gas tender under a cloud, Minister orders independent probe

The Ministry of Public Enterprise Development will commission independent procurement specialists to investigate the recent award of a lucrative gas tender to a Singapore-based company by Litro Gas Lanka Ltd.

“I am not happy with what happened,” Public Enterprise Development Minister Kabir Hashim told the Sunday Times. “I have received complaints that the process was not transparent. However, the Board of Directors of Litro is defending it. The Ministry has some issues.”

Instructions have been given to the Secretary to the Ministry of Enterprise Development, Ravindra Hewavitharana to look into the award of the tender and file a report, a spokesman for the Minister’s office said. Litro Gas is a fully-owned subsidiary of Sri Lanka Insurance Corporation (SLIC) which falls under the Ministry of Enterprise Development. However, its majority shareholder is the Treasury.

In April 2016, Litro Gas called for tenders for the supply of 250,000 metric tons of Liquefied Petroleum Gas (LPG) for the period 2016/2017. The requirement was to be evenly spread over a period of one year. LPG was to be supplied in ocean tankers and discharged at the Litro Gas terminal off Kerawalapitiya or at the Hambantota Port. The Bid Bond was specified at US$ 1 million.

Under the National Procurement Guidelines, when the bids are opened, the Bid Opening Committee must read out to those present the names of each bidder and the bid amount in the form of bid; whether or not a bid security or bid security declaration was submitted; and any discounts offered. However, these were not observed by the Committee appointed for this particular tender. Only the names of the bidders were revealed, according to a participant. After receiving complaints in this regard from bidders who participated in the tender, Mr Hewavitharanathe and SLIC Chairman Hemaka Amarasuriya wrote separately to the Litro Gas management, instructing them to suspend the process until further inquiry. These instructions were ignored, according to Minister Hashim’s office.

Soon afterwards, Litro Gas, in half-page advertisements in local newspapers, featur- ing its Chairman Shalila Moonesinghe and its Managing Director Muditha Pieris, said that, both the technical and commercial evaluation teams ranked and picked Shell Eastern Trading Pte Ltd as the winner of the tender. The notice also stated that the tender Board meeting was held with the participation of an official from the Public Enterprise Development Ministry.

Unsuccessful parties were notified by way of a letter dated June 21, 2016, of their failure to be awarded the contract, without any reasons given as to why their applications did not make the cut. These, and other factors have caused failed bidders to suspect that the decision to award the tender to Shell Eastern--which was also the winner for the 2015/2016 contract--was predetermined.

“We feel this was predetermined,” said the local representative of one company who reached out to this newspaper. “Already, the supplier was selected. They fabricated the atmosphere to award the tender to the favoured party.”

Litro Gas Chairman, Mr Moonesinghe, said they had followed in-house procurement guidelines, if not the National Procurement Guidelines. He said it was the first time all participating bidders had been invited to be present at the bid opening. Asked whether all parties had submitted the bid bond on time, he said the relevant information can be obtained from the Ministry if requested, and “in the proper forum”. He said it had been a collective decision to award the tender to Shell Eastern.