Speaking out for the first time in the controversial fuel issue, the Singapore unit of Dubai-based Emirates National Oil Company (ENOC) has rejected accusations that it supplied substandard petrol to Sri Lanka in April.
ENOC’s claim came amidst a new crisis surfacing in the Ceylon Petroleum Corporation (CPC) where, despite the tender issue over ENOC fuel, new tenders continue to be called outside the proper procedures and guidelines.
Last week a three-member committee appointed by the Government to probe the ‘dirty oil’ issue concluded that the Singapore company had supplied substandard petrol that, according to official estimates, led to the breakdown of around 2,000 vehicles.
But, speaking to the media for the first time, ENOC’s Singapore Trade Chief Jeremy Chia, told the Sunday Times in a telephone interview that there was nothing wrong with the fuel supplied and it was in accordance with CPC’s specifications.
He said ENOC would not pay any claims for damages if asked for by the CPC. Mr Chia said he was
unaware about the existence of a probe committee, its report or findings and thus was unable to comment on that matter.
Finance Ministry officials, who spoke on condition of anonymity, have accused the CPC of continuing to violate tender rules with fresh purchases. On Monday August 22, the CPC advertised for a long-term tender to supply 150,000 tons of LSFO (low sulphur fuel oil) for the Ceylon Electricity Board (CEB) in four parcels of 35,000 tons each every six weeks. The closing date was August 29, about a week after it opened when such periods normally extend to several weeks. The closing date of the tender was later extended to September 2.
The delivery in Colombo for this supply is to begin from September 10, just 8 days after the tender closes. This is irregular, the officials said, urging that a Presidential Commission should be appointed to probe the tender procedures adopted during the tenure of the present chairman, Harry Jayawardena.Another tender for the supply of bulk bitumen was also announced by the CPC last week. This was for the "expression of interest" for a joint venture partnership with the CPC for import, storage and sale of bulk bitumen including necessary infrastructure. Here again the tender closed on August 30, giving hardly any time for a serious contender to furnish the required details, these officials said.
The controversial ENOC supply was also a rushed-through tender process.
In the meantime, Petroleum Industries Minister Susil Premajayantha has ordered the CPC to suspend payment to ENOC Singapore. But a petroleum industry expert told the Sunday Times that payment for all purchases of products by the CPC was by irrevocable letters of credit and as such, payment could not be withheld for any reason, unless ordered by a Court of Law. It is therefore possible that the money has already reached the supplier and if so, to recover it from ENOC would mean years of court proceedings at heavy legal costs, he said.
The three-member committee headed by Power and Energy Ministry Secretary M.M.C. Ferdinando, found that the recommended procedure and guidelines had not been followed in importing the low quality fuel from ENOC.
The Committee has recommended that compensation be paid to motorists who were affected and the loss incurred by CPC be claimed from ENOC. It also recommended that any losses which are not recovered from ENOC, be collected from CPC officials found responsible. These officials were not named in the report.
Petroleum industry sources said that earlier procurement procedures at CPC had been streamlined and there were seldom any complaints from registered suppliers about decisions of the Tender Board. But this changed after Harry Jayawardena took over as Chairman, they alleged. Many tenders have been cancelled at the whims and fancies of certain officials, so much so that only three or four registered suppliers bid at these tenders thought there are some 20 registered suppliers on the CPC’s list.
The Finance Ministry officials, explaining their concern over the violation of established tender procedures at the CPC, said that in the past, on every Wednesday, a “stock review committee” met to discuss stocks of products to be ordered in the future after evaluating the needs of all stakeholders in the petroleum field.
Tenders were then called generally giving 3-4 weeks for the closing date, and thereafter a similar period for the supply of the product. “Now tenders are called for with only a few days for the closing date and in the case of shipment arrivals, just 4 to 5 days,” one senior official said adding this left room for manipulation and this was one of the reasons why many reputed suppliers had kept out of CPC tenders.
“Urgent requirement of products are necessitated only because of regular cancellation of tenders and not because the CEB requires urgent supply of LSFO for power generation,” he said. In the past too, LSFO was purchased by CPC for CEB, but purchases were planned well in advance and tenders were not cancelled like now, he added.
Meanwhile CPC sources were of the opinion that Mr. Jayawardena was unlikely to be removed as CPC chief because of powerful political connections and also because of his close links to the US (through the Clintons) where his services could be indispensable to the government to improve US-Lanka ties which at the moment are strained.