18 October, 2017

Investor Confidence At Risk: Ports Minister Arjuna Accused Of Violating Tender Rules

Fresh on the heels of Senior government Minister and General Secretary of the United National Party Kabir Hashim making representations to the President and the Prime Minister of serious lapses that can lead to billions of rupees of damage to the state coffers due to actions or inactions by the management of the Sri Lankan Airlines, Prime Minister’s office was last week alerted to another possible scandal that will damage investor confidence in the country.

This comes from another state agency that appears to continue its legacy from the previous government of major allegations of scandals and corruption – The Sri Lanka Ports Authority – SLPA.

One of India’s largest port services companies, Ocean Sparkle Limited (OSL), valued last year at around US$500 million with majority stakeholders being global funds including World Bank’s IFC, Standard Chartered Bank and funded by the Asian Development Bank, wrote to the Prime Minister last week, alleging that despite being the lowest bidder and despite the Cabinet Appointed Procurement Committee (CAPC) recommending an award of a tender to provide tug boat services to the Port Authority, in a deal worth millions of US dollars, to OSL, SLPA is yet to award the tender after almost one year since the tender was called.

OSL in their letter to the Prime Minister alleges that this delay is causing them heavy financial losses as the tender specified the tug boats needs to be deployed in 30 days of the award and therefore the company is currently keeping on standby these two “highly capital intensive assets” and is unable to make use of the boats elsewhere. SLPA invited tenders for the hire of two tugs to be deployed by the 15th September 2016 for a period of one year with a possible extension for another year. SLPA has also asked the company to keep on extending the bid bond validity since November last year until now, at “significant cost and expense”.

Documents attached to the representation made to the Prime Minister show that the Ministry of Ports and Shipping has informed the bidders of the decision to award the tender to the two lowest bidders, OSL and Sri Lanka Shipping Company (SLSC), on 2 November 2016. In their letter, the Ministry informs the unsuccessful bidder, Keppel Smit Towage Limited of Singapore (KSTL) that KSTL has seven days to appeal against the award decision to the Procurement Appeal Board (PAB) of the Presidential Secretariat. OSL claims that, to their knowledge, no such appeal had been made.

P. Jairaj Kumar, Chairman and Managing Director of OSL, says that the Minister of Ports and Shipping, Arjuna Ranatunga met with the company in Hyderabad and requested that the company changes its bid and also submit another “unsolicited” proposal for a long term charter of two tug boats (the tender was for a lease of one year with a possible extension for one more year) where the two boats will become the property of the SLPA for a consideration of only one US$ at the end of a ten year charter period.

Kumar says that a similar unsolicited proposal had been made by the unsuccessful bidder, KSTL, after the CAPC made known its decision to award the tender to OSL and SLSC.

Kumar states that as a company that is majority owned by some of the largest global fund managers, including World Bank’s funding arm, IFC, and being granted extensive credit facilities by the Asian Development Bank, the company has to ensure total transparency in its operations. Therefore, he said, the company is unable to comply with the Minister’s request, as it also contained other “opaque commitments”.

“The Asian Development Bank choose us as their first private sector investment in India’s ports sector, granting us a loan of US$40 million for fleet improvement. This is the level of trust and confidence that international agencies have on us and we have to maintain very high standards in our dealings to ensure that this level of trust and confidence will be maintained”, Kumar said.

In his letter to the Prime Minister, Kumar also says the shipping trade has represented in several forums of the delays in berthing/unberthing of vessels due to shortage of tugs at the Colombo port, affecting the efficiency of operations and resulting in huge loss to the trade. “Consequently these delays compromise the reputation of Colombo Port which is otherwise known for its efficiency and has been the choice of major shipping lines.”

Meanwhile, in an interview with the Sunday Observer on 11 September 2016, SLPA Chairman Dammika Ranatunga, elder brother of Minister Arjuna Ranatunga, claimed that two tugs being built in China will be delivered in February 2017 (last month) and that the tender to charter the two tugs are only till the new boats are delivered.

Kumar believes that these two “new tugs” are in fact the two tugs that the unsuccessful bidder KSTL had proposed to be supplied in its “unsolicited proposal” for a period of ten years – the proposal that the Minister had indicated OSL should also make.

An industry insider, on condition of anonymity, said that there will be a new tender to be called by the SLPA to cover the charter the two new tug boats.

“This is patently an attempt to subvert the Swiss challenge tender system the government has been trying to implement to achieve transparency and good governance,” the industry insider said.

“The new tender will have very specific conditions that will only match the technical specifications of the two new tugs that SLPA chairman has mentioned in his interview with the Sunday Observer in November last year. We are not aware of a tender that was awarded for the charter of these two tugs that the Chairman mentions in this interview”, the insider said.

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Latest comments

  • 14
    1

    The brothers Ranatunga continue with their genetic traits.

    Time to change the Minister of Ports!

    • 2
      2

      If all these speak but truth, AR has tob e invested basta.

      That is how we can safeguard Good governance.

  • 22
    3

    It is shame on the Yahapalana Govt that two highly ill- qualified persons have been asked to take charge of this country’s economic nerve centre -the Port. I refer to the Minister and his brother who is the Chairman. An incredibly ill fitting combination.

    Nothing more need be said. But Sirisena also hasn’t the guts to change anything. His appeasement strategy as Head of State, meeting every idiot who thinks it is his God given right to organize protests and block roads, has already pissed off millions of suffering commuters and ordinary people who ask for very little but are not given even that.

    AS promised, the Yahapalanites have certainly made a change. It appears to be a change for the worse.

    • 11
      0

      Bravo J&P fully endorse your comments !!

  • 12
    1

    How nice to see the Ranatunga boys doing their bit for the growing Yahapalanaya reputation.

    • 8
      1

      Spring,
      Among them that Sanjeewa seems to be the person to see it right. I alaso thought AR would do his job well. But he even BETRTAYED my3 and CBK here, if all these are true.

      Why these buggers behaves so ?

  • 4
    2

    Well, this Swiss tender process seems flawed. The Indian Company cannot force SLPA to take is tugs just because they are available! Sri Lanka should go with the best deal, and if it gets ownership of the Chinese tugs at the end of 10 years that would be a better deal.

    Just because World Bank and ADB are investors in an Indian operation, does not make its bid the best offer, if there are others making better bids.

    The SL port authority must go for the best offer.

    • 8
      0

      The article says that “…..”.OSL’ WAS THE LOWEST OFFER AND THE CABINET APPOINTED PROCUREMENT COMMITTEE RECOMMENDED TO THE PORTS AUTHORITY THAT THE TENDER BE AWARDED TO OSL OVER AN YEAR AGO”…… what more do you want ?

  • 14
    1

    Why should this surprise anyone. It is this same Mr Cool and now
    Mr Unclean or Mr Dirty (like Ranil Wickremesinghe) who wants
    to build apartments on state land.

    He wants to give 14 such apartments to winners of the Cricket
    World Cup free of charge. The four bedroom apartments are
    estimated to cost Rs 120 million. All this is because Ranatunga
    was the Captain of the team that won the World Cup 21 years
    ago.

    What a shameless racketeer he is. Like Malik Samarawickrema,
    Ravi Karunanayake, Lakshman Kiriella and Daya Gamage, he
    is also a record taker.

    Those who voted for Yahapalanaya are now missing. The JVP
    is silent because their leader Anura Kumara Dissanayake is
    paid monthly by Malik Samarawickrema. Has anyone heard of
    AKD saying anything against Malik the Rat Face?

    Yahapalanaya is floating is money. Economy is going down
    the drain and people have to pay mjore.

    • 4
      1

      Well said, Jehan Ameratunga! Keep it up!

      • 1
        2

        max moron

        “Well said, Jehan Ameratunga! Keep it up!”

        It appears that both of you are after free apartments, Rs 120 million each.

        It is awful lot of goodwill towards you if and when Ranatunga relented to grant you the ownership of these apartments.

        I am sure you will not stop haranguing him until both moved into the free apartments.

        Good luck, I wish you well.

    • 2
      0

      Jehan Ameratunga

      Could you name a few honest politicians.

  • 4
    0

    The award of a tender is the prerogative of the buyer and not the tenderer. Also, there is no obligation on the part of the buyer to award a tender to the lowest bidder. Modern tendering procedures consider many aspects when evaluating bids and price is only one aspect considered, though an important one.

    The objective of tender evaluation is to get the ‘BEST VALUE FOR MONEY’ for the buyer.

    The traditional method was to the Select the ‘Lowest Priced Offer that MeetsMinimum Requirements’. To put it mathematically, the task was to Minimize a Function F(x,q) (a set of values dependent on two variables) subjected to a single constraint q > qminNote: x = c (cost or price) and q = quality.

    The Difficulty about Quality in General is that it is a Fuzzy Quantity, that is Hard To Quantify With Mathematical Precision.

    However, the non price aspects that are to be considered when evaluating a tender depends on the type of product or service. For example, for a consultancy tender it could be as follows:

    1) Relevant experience
    2) Past performance
    3) Management and technical skills
    4) Local Resources
    5) Management systems
    6) Methodology
    7) Project Duration

    The evaluation methodology that will be used should be clearly and unambiguously given in the specifications, for the sake of transparency and fairness to all bidders, so that they may make a competitive bid.

    To me, the pressure put by the Indian bidder is uncalled for. Things such as the stated expense mentioned by the bidder should be considered only if it is stated in the specifications or any other document issued by the buyer at the outset.

  • 4
    1

    It looks Arjuna Ranathunga needs money for the election and therefore, he dealys the tender offering.

    • 0
      0

      If not Tenderer is forcing the buyer to offer him the tender.

  • 0
    0

    There is an ugly culture within the business community of corruption and having to bribe officials from the government to the private sector, to conduct straight forward business. Tenders usually means the lowest bidder gets the contract, but in this country it goes to the party that bribed some officials the most. Shame, shame, shame. There is no doubt politicians also play this filthy game, and it all about money. Unfortunately the government will never have harsh penalties and strict rules about conducting business, tenders, corruption, especially if we want the rest of the world to invest and do business here.
    To dream the impossible dream…..

  • 0
    0

    The great man never forget Eden gardens 1996!

  • 2
    0

    The Ranatungas began their political life with the SLFP. One of them have crossed over to the Ranil side.

    These guys are not by any means honest!

  • 1
    0

    Manel,

    With your education, culture and background the sordid stuff that goes today as “serving the people
    politically” will be beyond your decent comprehension. The first commentator writes of the “genetic
    traits” of the Ranatunga family. He seems to know the Ranatunga family. The father is reported to be a slimey
    theatre-owner who later came to control the Cooperative Society in Gampaha. He milked the Coop to the point
    the people of the area burnt his properties down in anger when the UNP won in 1977. Arjuna and his brothers
    have since shown their dishonest bones in different ways. They know everyone around knows what crooks they are. But they don’t care. They do not have an ounce of shame. Arjuna corrupted most of the
    Cricketers around him by showing them how their Duty-Free cars can be sold illegally and unethically.
    He was the one who got Buddhist priests to perform Buddhist rites at the airport – embarrassing the
    Christian, Hindu and Muslim players. He does not have the experience to be a Clerk in the Port – let alone head it.

    Why oh! why does this fellow, who travelled by train from Gampaha to Ananda, need so much of loot – stolen from the poor people. The Ranatungas surely do not have that much of votes or political clot in the Gamapaha region as the Bandaranaikes did. Why was he given such an important Ministry.

    A.D.J. Perera

  • 1
    0

    For the 08 January 2015 hustings, United National Front for Good Governance (UNFGG) pointed out the then prevalence of nepotism, corruption and break down in Law and Order. For the first time ever Lankans set aside the language/religious divide. Lankans hoped that nepotism and corruption will be bridled which i turn will lead to improvement in Law and Order.

    UNFGG pointed out the unlawful tender procedure obtaining in the previous regime. Arjuna has obviously breached this. Is his effort to have his brother into the Port, nepotism?

    UNFGG has failed to deliver Yahapalanaya. The real danger is the acceptance off nepotism and corruption as obvious parts of governance.

    Where to next?

    PS: How many Lanka MPs remember what the acronym UNFGG is for?

    • 0
      0

      Well said.This the reality that all politicians and countries must face.

  • 0
    0

    “If he/she takes bribes and gets away with it, why cant I too do it” seems to be the thinking of most politicians, public servants and others who are in positions where they can make a “fast buck”.

    The Bribery Commission is dead, police are “on the take”, courts of law and judges appear inefficient and untrustworthy, and thus a climate of ‘wholesale corruption’ has been entrenched in the nation.

    This has to be corrected before changing the constitution.

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