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CEB calls for bids on gas turbines
The Ceylon Electricity Board has called bids for the design, manufacture, supply, installation and commissioning of three 35-megawatt gas turbines at the Kelanitissa Power Station.
Interested parties are expected to come forward with 100 percent financing for the project, without the possibility of a Government guarantee, but the option of a counter-guarantee by the People’s Bank on supplier credit basis.
The purchase of the three 35mw gas turbines was in the approved long-term generation expansion plan since 2007. But the project was in limbo for years.
The initial procurement process started as far back as February 2016. A Project Management Unit (PMU) was set up, complete with allowances and other benefits for members. But the CEB didn’t complete the request for proposals (RFP) document until 2019 when it was finally submitted to a Standing Cabinet Appointed Procurement Committee (SCAPC).
The SCAPC approved the RFP and instructed the CEB to advertise it, thereby inviting bids. This was also not done. Instead, in July 2019, a board paper was submitted requesting a higher allocation for the project – as the dollar had appreciated against the rupee, thereby making the turbines significantly costlier to acquire – and also to extend the period of the PMU, with all its emoluments.
By then, the country was in a severe power crisis. The CEB board decided the utility cannot wait any longer for the team to produce another tender. It instructed the General Manager (GM) to submit a proposal to fast-track the process.
The board also directed the GM to explore alternatives in the market that can come into operation within a shorter timeframe as nobody could wait another three years. It was agreed to adopt modern aero-derivative gas turbines that are operational in six months.
The PMU was re-formulated and placed under the CEB’s Transmission Division. The tender was advertised in October 2019 and five bids were received in December 2019. Two bidders – CNTIC and a company named TSK – were notified that they were shortlisted after technical bids were opened.
However, the CEB GM then maintained that the utility did not have money for the project as the allocation was used to settle urgent dues to the Ceylon Petroleum Corporation. He additionally claimed that the chosen financial institution, People’s Bank, had said it needed a Treasury guarantee before it could lend the funds.
In October 2020, a full year after the tender was published, the Ministry sought approval from Cabinet to either direct the Treasury to issue a guarantee to the People’s Bank for a loan of US$ 113mn for the procurement; or to cancel the initial tender and direct the CEB to issue a fresh request on supplier’s credit financing basis. The second option was approved and it is on this basis that the utility has called fresh tenders.