In a letter dated 23 June Litro’s newly appointed Chairman and CEO Muditha Peiris wrote to BB Energy (Asia) Pvt Ltd, OQ Trading Limited and Siam Gas Trading Pte Ltd saying it decided to cancel the procurement for the supply of LPG for the year 2022/2023 bearing reference LGLL/LPG/001/ICB/2022 based on approval given by the Cabinet of Ministers. The letter went on to say that Sri Lanka is not in a position to issue standby Letters of Credit as per the terms and conditions of the contract due to the prevailing economic situation in the country and that they will be invited for the future procurement which is planned by the company in due course.
Peiris, who took up his appointment at Litro on the 13th of June told Counterpoint that there is a Cabinet paper dated 14th June canceling existing procurements and a new tender will be called for in the future. ‘The Cabinet of Ministers took this decision before I took the job. I am only implementing their decision’.
Until a new tender is called the Cabinet has given the greenlight to import 100, 000 MT of LPG in the next four months at a cost of USD 129 per MT which will be paid for in advance. This cost covers shipping and insurance, usually about one dollar. The price of the gas will be at Saudi Aramco’s rates.
According to Peiris there will be a delivery of 25, 000 MT every month. To begin, there will be one delivery of 3700 MT on the 5th of July and another on the 12th of July.
Litro’s letter to suppliers comes amidst a brewing controversy of an alleged fraud in procurement which is threatening to engulf Prime Minister Ranil Wickremesinghe and his former Chief of Staff Sagala Ratnayake. Earlier this week Wickremesinghe and opposition parliamentarian Dayasiri Jayasekera clashed in parliament over the matter.
‘Ranil Wickremesinghe had no reply when the Opposition asked him why gas is being purchased at a higher price of USD 129 instead of the USD 96 which was approved by Cabinet’, points out Nagananda Kodituwakku who brought the matter to the attention of the public and has been vocal about it since.
Speaking to Counterpoint, Kodituwakku who is a lawyer and crusader against corruption who was a candidate at the presidential election in 2019 which was won by President Gotabaya Rajapaksa, is accusing Wickremesinghe and Ratnayake of amassing a commission of 6 bn by allegedly purchasing gas at the higher price. ‘There is a USD 33 difference in the prices. It’s a crime’, he decries.
He explains how in late April this year, the Cabinet awarded the tender to Singapore based Siam Gas but that the PM is overriding this and is making spot purchases from OQ Trading which was incorporated in Dubai in 2006.
‘This is completely wrong, there is no transparency with this type of procurement which is outside the tender process. The country will lose billions in one calendar year’.
OQ which was supplying gas to Sri Lanka during the Yahapalana coalition government when Wickremesinghe was PM, is among the three suppliers who made a bid in late April to supply gas. According to Kodituwakku, BB, OQ and Siam made bids at 148, 129 and 96 USD respectively to supply 280, 000 MT when a tender was called and the bid made by Siam had been accepted.
‘On the 3rd of May Litro wrote to Siam that the Cabinet had awarded the tender to them and on the 4th of May they wrote to the Treasury Secretary about the cabinet decision. In addition to this Litro had asked Siam for an extra 15, 000 MT on an urgent basis and Siam replied almost immediately saying it can supply 6600 MT on the 30th of May and the balance on the 1st of June’.
Kodituwakku goes on to explain how another company in Oman, Active Oil and Gas with over 40 years of experience in oil exploration, had contacted him and told him they had offered to supply the required volume of gas which was required for USD 74.
He says Litro and the Prime Minister are giving misleading information by saying that Siam was rejected because they were able to supply only 6600 MT. ‘This is not true. They are deliberately omitting the balance which Siam had no issue supplying’.
Peiris, who was heading Litro during the Yahapalana government, denies any malpractice. ‘These are baseless allegations’. He goes on to explain that Siam had wanted a standby LC which the government is currently not in a position to provide.
Kodituwakku is adamant he will take legal action over the matter. ‘I have informed the Commission Investigating Allegations of Bribery and Corruption and written to the World Bank which said it will give USD 70 million to purchase gas, about the matter and have attached all the documents. I have written to the World Bank country office in Sri Lanka and to its headquarters.
According to Kodituwakku a fraud of this nature would have carried a penal sanction of 10 years rigorous imprisonment. Anti -corruption and social justice activists have been calling for the revival of the National Procurement Commission which would have ensured checks and balances on tenders. The Commission was abolished by the 20th amendment to the Constitution which was passed after President Gotabaya Rajapaksa took office as president.
