Why Senathirajah is on the side of Gen. Fonseka?

Here is reason why Mr. Mavai Senathirajah fell against President Mahinda Rajapaksha and finds himself on the side of Gen. Fonseka.

Reliable sources say Mr. Senathirajah sometime back had requested the President to award a contract for US$ 45 million to a company without a tender which the President had declined.

Stating that the cost of generation of electricity was very much higher than it is sold for (the situation was same elsewhere in the country too), Mr.Senathirajah had made two communications to the President dated 03rd February and 21st March 2006, recommending a contract of US$ 45 million to be given to M/s Euro Asian Agency (Pvt) Ltd without a tender. A proposal unsolicited one, lacking transparency. The Chairman of M/s Euro Asian Agency (Pvt) Ltd is Mr. D C Wickremasinghe.

Mr. Senathirajah also met Minister of Power and Energy who submitted a paper to the cabinet. Thereafter, the cabinet approved the Minister’s paper, which was subsequently turned down by the President who got wind of this scam.

It is this grudge that Mr.Mavai Senathirajah has against President Mahinda Rajapaksha, and is now advocating to support General Sarath Fonseka, so he could obtain kick backs by instigating various projects in Jaffna. Mavai stands exposed.

Had the President awarded this contract, then today Mavai Senathirajah and Sambandan would have been supporting Mahinda Rajapaksa.

The price of Electricity which is sold to the consumer in Jaffna, Hambantota, Colombo and Trincomalee is the same.

Electricity is subsidized heavily by the Government. The poor pays less whilst the affluent pays a higher price.

Mavai Senathirajah can only request for projects to be started for the people of Jaffna as their representative but not nominated companies to be awarded contracts for Rs. 5,000,000,000.00 (Rupees Five Billion) without a tender.

The following is his letter to the President:

Mavai S. Senathirajah MP
A 15, MP’s Quarters, Madiwela
Sri Jayewardenapura
Tel: 2778470, (M) 0777-373377

His Excellency Mr. Mahinda Rajapakse,
President of the Republic of Sri Lanka,
Presidential Secretariat,
Colombo -01

Your Excellency,

Electrical Power Supply in the Jaffna Peninsular

I write in reference to the supply of electrical power in the Jaffna Peninsular, regarding which I have addressed previous correspondence and had several discussions at the Ministry of Finance and the line Ministry of Power and Energy.

At present, the power supply in the peninsular is not connected to the national grid and is operated as a separated sub-grid within the peninsular. The power supplied is entirely generated in situ at Chunnakam and KKS by two private companies on short term Emergency Power Supply Contracts with the CEB. The equipment used are obsolete temporary generating sets running on high cost auto-diesel. Most are similar to temporary carnival lighting sets.

None comply with environmental standards in regard to exhaust emissions and noise pollution. No arrangements have been made by the CEB/GOSL to rectify these matters. As a matter of routine, the Emergency Power Supply Contracts are periodically extended/renewed resulting in enormous financial losses to the CEB/GOSL.

The cost factor is an important consideration. These short term Emergency Power contracts run on subsidized auto-diesel resulting in a cost of Rs.19.65 per kWh. When a transmission loss estimated at 30% is added, the actual cost exceeds Rs.25.50, whereas the average selling price is around Rs.7.7 per kWh. On this basis the annual loss to the GOSL on a volume of 30MW of power is Rs. 4.5 billion. The consumption is likely to increase in time, and if the lines are extended southwards beyond Elephant Pass to the Killinochchi District, the consumption will increase to 50MW very quickly. On a volume of 50MW the loss will balloon to a staggering Rs.7.7 billion. Whilst I appreciate that a loss cannot be avoided altogether due to the high cost of generating thermal power, at least some effort can be made to minimize the loss and arrange the supply of electricity to be placed on a permanent basis to meet environmental standards.

It is with these views in mind that I initiated discussion with the Ministry of Finance Director General Triple-R, and the line Ministry of Power and Energy. I am aware of a proposal submitted by M/s Euro Asian Agencies(Private) Ltd which adequately addresses the shortcomings referred to above. This proposal represents an investment of US$ 45 million is providing two permanent power generating stations at Chunnakam and KKS is association with Zoom Developers (Private) Ltd and Kirloskar Peilstick both of India. The document was originally handed over in three parallel copies to the Ministries of Finance, Power & Energy and Triple-R in October 1994 and revised in April 2005. Meaningful steps have not been taken to implement the proposal in spite of the manifest advantages.

This proposal addresses the following issues which I considered important to the wellbeing of the people in the Peninsular and the immediate environments.

• The establishment of two permanent power stations will eliminate the need for temporary emergency generating sets as currently used in an ad-hoc manner.

• The availability of permanent power will eliminate uncertainty and encourage people to invest in industry and other enterprises with a level of confidence which is lacking at the moment.

• The power stations will operate on low cost Furnace Oil (HFO) instead of subsidized auto-diesel. The cost per unit of electricity to the CEB/GOSL will be approximately Rs.11.55 per kWh compared to Rs.19.65 per kWh with the emergency generating sets. Even with a line loss of 30% the total cost will be Rs. 15.00 compared to Rs.25.50 per kWh. This is a saving of Rs.10/50 in cost per kWh to the CEB/GOSL. On a volume of 30MW, the annual loss can be reduced by Rs. 2.6 billion and on a volume of 50MW the saving will be Rs. 4.4 billion.

• The proposal is drawn on a BOT basis where the capital cost of the power stations is recovered over a period 7 ½ years period, the stations are to be transferred to the GOSL at a token price of US$100.

• Both power stations will comply with the highest environmental standards in regard to exhaust emissions and noise levels. The CEB completely ignored theses requirements within the peninsular, setting double standards in their operations.

• The permanent stations will provide adequate power to extend the supply lines south through Elephant Pass to the Kilinochchi District. If the lines are restored, the need to run auto-diesel fueled emergency generating sets in the District will be altogether eliminated. They are a major financial burden to the GOSL.

• It is my contention that economies must be affected where possible and the finances economized used to improve other infrastructure facilities in the region.

I will be grateful if this matter is given the highest priority. Meanwhile, I will be in communication with the Honorable Minister of Power & Energy with the view of expediting this matter. An important point to note is that the saving in cost in one year will cover the full cost of the two permanent power stations. They have an operational life span of 15-20 years. The lethargy in implementing this proposal is therefore not justified.

Thanking you.

Yours sincerely
Mavai S. Senathirajah MP.
Jaffna District.

The letter to the President from the Power and Energy Ministry:

SUPPLY OF ELECTRICITY TO JAFFNA PENINSULA

At present the power supply in the Jaffna Peninsula is not connected to the National Grid due to the breakdowns of the transmission system from Vavuniya to Jaffna and is operated as a separate sub Grid within the Jaffna Peninsula. The power supplied is entirely generated by high cost auto diesel in situ at Chaunnakam and KKS by Aggreco Ltd and Col Air Ltd both are emergency power producers (IPP’s) at a average cost of Rs. 20K Wh per unit on short term emergency power supply contracts with the CEB, sustaining a loss of around Rs. 1150 per KWh unit or an approximately Rs. 100 Mn per month. The above two emergency power purchase contracts are due to expire on 31.12.2001. Therefore Cabinet of Ministers at its meeting held on 24.05.2006 has granted approval to:-

a. Request the DG/ERD to explore the possibility of arranging a credit facility for construction of 35MW Power Plant in Jaffna on priority basis.

b. Call for fresh bids to purchase power on competitive basis up to 35MW on short term basis to meet the demand of the Northern Peninsula, until the completion of the construction of 35MW Power Plant by the CEB whichever occurs earlier.

c. Appoint a Project Committee (PC) and a Cabinet Appointed Negotiating Committee (CANC) to evaluate bids and make recommendations to the Cabinet for its consideration (copies of the said Cabinet Memorandum dated 19.05.2006 and its decision dated 24.05.2006 are annexed hereto marked A and B).

In the meantime, Hon Mavai S. Senadhirajah M.P for Jaffna District by his two communications addressed to His Excellency the President and to me dated 03.02.2006 and 21.03.2006 respectively (annexed C and D) has expressed his concern over the manner in which the electricity supply is generated and supplied by the above two emergency power producers M/s Aggreco Limited and Cool Air Limited and emphasized the need of establishing two permanent power stations operated from low cost heavy furnance oil (HFO) instead of subsidized auto diesel in a more stable manner providing electricity at affordable rate to Jaffna community and to the CEB, eliminating uncertainty and encouraging the people in the Jaffna peninsula to invest in industries and other enterprises with a level of confidence which is lacking at the moment. Therefore the proposal submitted by M/s Euro Asian Agency (Pvt) Ltd (annex E) which represent an investment of US$ 45Mn, recommended by Hon. MP was considered in view of the following:-

i. The object behind the calling for bids from independent power producers (IPPs) is to get the best price for the CEB and to avoid continuation of the existing emergency power purchase arrangements at exorbitant prices, as the losses sustained at present by the CEB due to this arrangement is extremely high. This position is further aggravated with the distribution loss, which is said to be in the region of around 30%. Such objective could be realized only if there are capable of IPP’s who are ready to generate and supply electricity w.e.f 01.01.2007.

As there are no other IPPs in Jaffna Peninsula other than M/s Aggreco and Cool Air Limited, only option available for the CEB is to mobilize an IPP capable of constructing a Plant within the remaining six months period (July to December) and to be ready for commissioning by the end of December 2006. It is in that context proceeding within the bidding process in pursuance of the above cabinet decision ( no paper advertisement has been published yet by the CEN) will not bring the expected result and the time period available after completion of bidding process is hardly sufficient for any successful Bidder to establish a Plant in Jaffna Peninsula before end of 2006. Therefore the present situation tends to compel the CEB to extend the validity of existing two emergency power contracts at exorbitance prices.

ii. The above proposal seems to address the concerns of the Hon. M.P. and the aspirations of the community living in the Jaffna Peninsula and the immediate environs, wherein it is emphasized that the power supply in Jaffna area could be made available at the much lower rate of U.S.$ 0.1220 per kWh unit.

iii. CEB has no funds for establishing a Power Plant in Jaffna, and the attempt of the ERD to attract donor funding (JICA Grant) has not been successful. Therefore, only option available for the CEB is to find a suitable Independent Power Producer (IPP) who is capable to install the Plant in Jaffna within the six months period and generate power or to extend the validity of the two emergency power contracts operated Auto Diesel.

(2) Under these circumstances and the prevailing security situation in the Jaffna Peninsula, it is not advisable to rely only on the open bidding process for procurement of power for Jaffna Peninsula and wish to recommend following course of action also for the approval of the Cabinet of Ministers.

2.1 To entertain the unsolicited proposal submitted by M/s Euro Asian Agency (Pvt) Ltd recommended by the Hon M.P. for evaluation and negotiation by a Project Committee (PC) and a Cabinet appointed negotiating Committee (CANC)

2.2 To authorize the National Procurement Agency (NPA) to appoint a PC for evaluation of the proposal submitted by M/s Euro Asian Agency Ltd and a CANC for negotiations of the tariff and other terms applicable for procurement of power by the CEB.

W.D.J. Seneviratna
Minister of Power and Energy
Ministry of Power and Energy
493/1, T.B.Jayah Mawatha,
Colombo 10,
19th June 2006

- Asian Tribune -