COPE instructs AG to launch probe

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The Committee on Public Enterprises (COPE) instructed the Auditor General to investigate the cancelling the Term Tender to Siam Gas, Thailand to purchase gas and giving the tender to a company that provided gas at a higher price.

The Term Tender for Siam Gas had been awarded to purchase gas worth USD 96 million. However, it had been cancelled and the tender had been awarded to an Omani company to purchase gas for USD 126 million.

This instruction was given at the COPE meeting on Tuesday (5), where the officials of Litro Gas Lanka, Litro Gas Terminal, and Sri Lanka Insurance Corporation were summoned.

It was revealed that since the Term Tender to purchase gas expired in February, new tenders were called to purchase 280,000 MT of gas. Three suppliers had presented their bids and Cabinet approval was granted for the tender of Siam Gas as the company had presented the lowest bid.

Litro officials informed COPE that despite granting the tender, the local banks could not provide a Standby Letter of Credit (LC) as requested by the company. Although discussions were held with Siam Gas, the company did not agree to supply gas without a Standby LC.

Thus, another discussion was held with the company to purchase 15,000 MT of gas as an emergency purchase. However, the company informed they could only supply 6,000 MT of gas. Therefore, the tender was awarded to the Omani company that agreed to supply 25,000 MT of gas per month for four months for USD 126 million, the officials said.

When the situation was conveyed to Cabinet, approval was granted to cancel the Term Tender given to Siam Gas and give it to the Omani company. Therefore, USD 70 million of credit aid of the World Bank and USD 20 million of Litro Gas were used to purchase gas, Litro Chairman Muditha Peiris said.

COPE said cancelling Term Tenders in this manner, despite the circumstances could be a bad future example. Therefore, the Auditor General was instructed to conduct an investigation if the credit provided by the World Bank had been used in an effective manner.

Furthermore, COPE inquired as to why USD 160 million allocated from the Indian Credit Line to purchase gas could not be utilised. 

By Methmalie Dissanayake