Blacklisted fuel supplier reinstated

More shocking details about dirty CPC deals
By Bandula Sirimanne

The state-owned Ceylon Petroleum Corporation (CPC) re-instated a blacklisted fuel supplier, ignoring tender procedures and resorted to private negotiations by-passing three official committees, it has come to light.

As a result, a five-member Special Cabinet Appointed Procurement Committee has been tasked to screen purchases. This is besides the role of the Technical Committee that evaluates CPC tenders and the Cabinet Approved Tender Board.

Petroleum Industries Minister Susil Premajayantha told the Sunday Times the Cabinet team headed by Senior Minister A.H.M. Fowzie would “streamline CPC tender procedures”. He said it was empowered to inquire into any irregularities in the awarding of tenders to fuel suppliers and to take action accordingly.
He said there was a requirement to award tenders 35 days in advance of a shipment. However, this was not done and his Ministry officials were left in a quandary, Mr. Premajayantha said.

He noted that there were occasions when the CPC had to import fuel within one or two days as it had to meet the requirements of the Ceylon Electricity Board. “This cannot be taken as an excuse for failure to follow tender procedure,” he added.

Meanwhile, the three-member H.M.C. Ferdinando committee that probed the import of stocks of contaminated fuel is yet to finalize its report. These stocks were purchased from ENOC, a firm in the United Arab Emirates (UAE). Minister Premjayantha said this report would be released next week.

Investigations have revealed that a Company named Vitol Singapore which was black-listed for more than a year for the supply of poor quality fuel oil has been reinstated by a special board paper presented by CPC Chairman Harry Jayawardane. Vitol Singapore has paid US $150,000 for its reinstatement, a senior CPC official said.

They offered at the last tender for 20,000 MT High Sulphur Fuel Oil (HSFO) at a premium of US$ 88 per MT. However, BB Energy which offered a lower price at a premium of US$ 68.75 per MT was not awarded the tender. It is also alleged that Vitol had sold another cargo of HSFO, outside tender, at a premium between US$ 88 and US$ 90 per MT.

Fuel oil suppliers questioned as to how a company that was blacklisted just a year ago, has once again being enlisted? Has Vitol paid the loss suffered by the CPC? The reason it was blacklisted by a previous CPC Chairman was that its cargo was mixed with waste lubricants and the Kerawalapitiya power plant was unable to use the its HSFO stocks.

The total loss caused by this incident was around US$ 2 to 3 million, a senior CPC official said. They alleged that a top CPC official is now approaching registered suppliers to have their current local agents changed to companies that belonged to him.

Alleged racket after racket: story in the dates

Suppliers are up in arms that tenders are floated giving hardly anytime for shipment with delivery dates just a few days away. They revealed that Tender BK/38/2011 for 300,000 barrels Gas Oil was floated on August 11 for delivery on August 22 or 23. The tender closing time was 3 p.m. on August 16 with 72 hours validity. The tender award would therefore have to be made on August 19.

A supplier in Singapore said that unless CPC had someone already lined up, it was impossible to find a vessel to reach Colombo on August 22-23. Only two parties had offered on this tender i.e. Vitol of Singapore and Reliance of India, he said.

CPC floated another tender (BK/40/2011) for 200,000 barrels of Jet A1, closing on August 16 for delivery on September 7-8 this year. The validity of the offer is for three working days which would mean that the award will be made by August 19, giving suppliers adequate time to fix vessels for delivery in September. Again only the aforesaid two parties offered bids, he revealed.

All these dealings are taking place under the directions of new Commercial Manager who was working for ENOC in Singapore for some time. He was one of the officials responsible for supplying dirty petrol that created havoc in the country recently, fuel suppliers alleged.

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