ECONOMYNEXT – Sri Lanka’s new government has come under fire over a reported move state-run Ceylon Electricity Board (CEB) to continue to purchase fuel without competitive bidding, and with a deal struck with Ceylon Petroleum Corporation.
Sri Lanka’s Daily Mirror newspaper reported that CEB has decided not to go ahead with competitive procurement of fuel but to strike a deal with Ceylon Petroleum Corporation, reversing decision by the earlier administration to move for open tendering.
The report said the CEB had decided not to go for competitive bidding since there was
no substantial price variation among different suppliers, the report said.
The last towards the end of its term had decided to call for bids from different fuel suppliers such as the CPC, LIOC and Sinopec for fuel supply, after multiple fuel distributors were established.
Attempts to contact senior CEB officials were not successful at the time of publication.
A heated debate erupted on social media with some x.com users calling on President Anura Dissanayake use competitive bidding for fuel.
“Why on earth would you cancel an open bidding process?,” an X.com user questioned.
Why on earth would you cancel an open bidding process? 🤷♂️ https://t.co/Hlut4Zmyvv
— Kasun (@kasun_am) October 16, 2024
“Transparency matters for long-term savings and accountability,” another x.com user said.
“Open bidding was expected to increase transparency and competition in fuel procurement.”
“So the government is no longer worried about the low price, and opening doors for commissions and corruption?”
“@anuradisanayake, kindly restore the open bidding system. Transparency is a must.”
CPC procurement inefficiencies, over staffing and alleged corruption have been blamed for high profits earned by Lanka IOC which is piggy-backing on Ceylon Petroleum Corporation’s pricing.
There has been concerns raised that CPC is selling fuel as the monopoly supplier without bulk discounts or even dealer margins to the CEB.
CEB officials had said earlier that artificially high prices charged by the CPC for furnace oil was forcing the CEB to run diesel plants. Diesel is higher cost fuel to import.
Dhananath Fernando, the CEO of Colombo-based think tank Advocata which has been pushing for free market and liberal economic policies, said CPC supplier monopolies pushed up costs of both the CPC and other state enterprises.
SriLankan Airlines for example had to pay higher than market prices for fuel in Colombo contributing to its losses.
“This won’t just impact CPC & CEB with losses and corruption. It’ll extend to SriLankan Airlines, People’s Bank (PB), and BOC (Bank of Ceylon), he said in his X-platform.
“CPC hikes prices for UL (SriLankan Airlines) to offset losses, and BOC & PB are forced to finance these deficits. Ultimately, taxpayers bear the burden.”
A so-called sovereign-bank nexus, involving incestuous transactions between state energy entities and state banks also contributed to the island’s sovereign default and severely hit Peoples’ Bank and Bank of Ceylon.
The state banks got into trouble partly because transactions with private banks were restricted. (Colombo/Oct16/2024)