Business Times

Arbitrary tender cancellation delays Sri Lanka’s crude oil importation

By Bandula Sirimanna

Sri Lanka’s crude oil annual imports which should have comenced from October have been delayed unnecessarily as a result of the cancellation of the Ceylon Petroleum Corporation (CPC) tender called to obtain cost effective transportation of crude, from Iran. Over 90% of the country’s crude requirements comes from Iran because of an extended (7-month) credit facility.

The CPC had called for tenders in August this year for the voyage charter of a tanker for the delivery of 2.0 million MT of crude oil for a period of one year from 1st October 2011 to 30 September 2012, informed sources said.

Three shipping companies including J. M. Baxi Far East Pte Ltd on behalf of M/S Norvic Shipping, Canada submitted their bids on 23rd August 2011. According to this company officials they had offered the vessel M.T.Nataly at a rate of US$7.99 per MT for te tender which was the lowest rate amongst the technically qualified bids- complying with each and every criteria set out in the tender document. In the course of the negotiations with the CPC the company also accepted all the contractual terms as set out in the tender document.

However the 5-member ministerial committee headed by Minister A.H.M.Fowzie appointed to oversee tender procedures has cancelled the tender citing some short- comings of bidders. This was confirmed by Minister of Petroleum Industries Susil Premajayantha. He told the Business Times that the Ministry has directed the Ceylon Shipping Corporation (CSC) to handle the transportation of crude oil, because these bidders were rejected by the committee due to some shortcomings in the offer made by these shipping companies. A cabinet decision has been taken last year to seek the assistance of the CSC if there is a need, he added. But no decision has been taken to deploy CSC vessel M.T.Chryssi offered by the corporation to transport crude oil.

Shipping companies involved in oil transportation expressed their disappointment on the Ministry’s decision to cancel the tender and seek assistance from the CSC. They were of the view that there was no purpose in calling for tenders under these circumstances because the Ministry is used to take arbitrary decisions. The tender document clearly required a vessel to be less than 20 years of age throughout the period of the charter. The CSC vessel will turn 20 years of age by the end of November 2011. This simple fact should have entailed the disqualification of the M.T.Chryssi, they alleged.

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