Cabinet to select fuel suppliers in bid to end CPC tender benders

By Bandula Sirimanna

Petroleum Minister Susil Premajayantha has submitted a cabinet memorandum to streamline the awarding of Ceylon Petroleum Corporation tenders after a series of recent revelations of tender manipulations, a senior CPC official who wished to be anonymous told the Sunday Times. He said that hereafter the cabinet of ministers would select suitable suppliers on the recommendations made by a Cabinet-appointed tender board.

The decision comes in the wake of an impending electricity hike announced by President Mahinda Rajapaksa in the budget. One of the main factors for the increase from January is a result of the CPC removing the subsidy to the Ceylon Electricity Board (CEB). This loss is being passed on to the consumer by the CEB.

Meanwhile, another reported tender manipulation of the CPC in the purchase of low Sulphur fuel oil 1500 sec for delivery at Muthurajawela early this month has come to light, with the revelations of tender benders at CPC in our front page story last week.

This tender was awarded to a company called Petrobas which could not carry out the contract after the cancellation of bids twice and recalling tenders for the third time, oil industry sources said. They alleged that the cancellation of tenders was a frequent occurrence at the CPC. Only one offer was received from the supplier BB Energy Singapore at around US$ 25 a ton and the tender at issue was cancelled and recalled without any valid reasons,

For the second time offers were received from BB Energy, Petrobas, and Shell at prices of US$ 28.73, US$ 39.24 and US$ 48.00 a ton respectively. The tender at issue was again cancelled and fresh bids were called on November 22.

In response three offers were received from Petrobas, BB Energy, and Buckri at prices of US$. 31.40, US$. 32.73.and US$. 47 respectively. This tender was awarded to Petrobas which could not carry out the contract. This tender was again recalled for the fourth time with a delivery range in mid December 2010. Buckri, BB Energy, and Shell applied for it quoting prices of US$. 27,74, US$. 35.58, and US$. 55.50 respectively. The Sunday Times reliably understands that the lowest offer was made by Buckri outside the tender conditions and that BB Energy too had quoted a lower price for a lesser quantity of fuel oil.

The cancellation and recalling of tenders were made by the Cabinet-Appointed Tender Board where the Petroleum Ministry Secretary plays a vital role, oil industry source said. Low Sulphur fuel oil 1500 sec is required to meet the demand of thermal power plants in the country. The failure of the CPC to import this product in time will compel the CEB to impose power cuts.

The CPC is currently importing nearly 30 million litres (30,000 tons) of low-sulphur fuel oil at an average cost of Rs. 68 and selling it to Kerawalapitya Combined Cycle Power Plant for Rs. 52, losing Rs.16 a litre. The CPC was incurring a staggering Rs. 480m loss a month, this official said.

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