The Ceylon Electricity Board Engineers Union (CEBEU) in a memorandum to President Kumaratunga has said that the CEB in conjunction with the Treasury is negotiating to procure emergency power from a Monaco Company which will cost a minimum of Rs. 17 billion.

The CEBEU memorandum said that they have called on President Chandrika Kumaratunga to ensure that public funds are not wasted yet again.

They have also urged the President to verifying legitimacy and experience of the company Infrastructure Development and Investment Limited and Aggreko plc in power related activities.

"The offered tariff of US$ 0.048/kwh plus fuel costs works out to Rs. 9.82 per unit at the present exchange rate which is very expensive considering present market prices.The CEB/Treasury will need a minimum of Rs. 17 billion to maintain the purchase of the 200 Mw for one year".

"We as loyal engineers of the CEB are of the view that the country cannot afford to procure emergency power from any source with the present economic conditions within the CEB and the Government. Therefore, there is no option but to continue the power cuts until we receive enough rains in the catchment areas. We also wish to place on record that 115 MW will be introduced to the grid with the commissioning of the simple cycle operation of the OECF funded Combined Cycle Power Plant.

The only alternative to come out of this difficult situation is to solicit the support of the friendly countries to help us extending credit lines or soft loans on minimal interest rates. Apart from Your Excellency, many others holding responsible office will not persue this avenue as there are no personal benefits for them. We strongly advise your goodself to consider this option, the CEBEU states in a communication to the President.

Offer made by Infrastructure Development and Investment Ltd. of Monaco

In their offer they quote as "All payments related to rental of 240 MW power generation equipment, supply of 200 MW Continuous power, fuel and lube oil to be by irrevocable, divisible, transferable, confirmed Letter of Credit from an acceptable International bank payable 360 days at LIBOR(London Interbank offer rate) plus 2.5% p.a. (Actual premium on interest rate applicable will be the prevailing rate on date of establishment of Letter of Credit. This quote is from a UK Banking Institution at today’s rate and are beyond our control)".

The commercial loan of US $ 200 million offered to the Government of Sri Lanka by the Deutsche Bank was rejected saying the interest rate was too high when they offered LIBOR plus 2%. Furthermore, all defense procurement offering LIBOR plus 2% was rejected and the suppliers were told to offer LIBOR plus 1.5% to 1.7%. Therefore, this offer of LIBOR plus 2.5% works out to almost 8% interest and is totally unjustifiable considering the present economic situation.

There clause for irrevocable, divisible, transferable confirmed Letter of Credit is also questionable.

On what basis could the CEB justify establishing a Letter of Credit which is divisible and transferable, a practice that has never been used in the history of all Sri Lankan Government transactions?

GE Energy Rentals is part of General Electric Co. USA which is the world’s largest corporation and the undisputed leader in power related activities. Why they want to approach the Sri Lankan market through a company in Monaco remains to be a mystery. GE could very well channel their offer through the American Embassy in Sri Lanka where this transaction could be very much more transparent.

Their offer also states that " IDIL may transfer its rights of this proposal to special purpose companies or to another entity or entities subject only to such companies or entities entering into a covenant to be bound by the terms of this Proposal".

Why do they need to transfer the rights of the proposal to another company in the event of a contract? Is it money laundering, excessive commission payments or funding other political/terrorist organizations.

The offered tariff of US$0.048/kwh plus fuel costs works out to Rs. 9.82 per unit at todays exchange rate. This figure is very expensive considering the present market prices. The CEB/Treasury will need a minimum of Rs. 17 billion to maintain the purchase of the offered 200 MW for one year.

It is a known fact that the CEB is presently in debt in excess of Rs. 10 billion. Is it feasible to proceed with a transaction of this nature under the present context.

There is enough proof for us to believe that this offer is actively being promoted by Mr. Nimal Cook of the Maharajah Organisation. The attached correspondence from the CEB is copied to Mr. Viraj Perera who is a very close confidante of Mr. Cook, who is now heading a "dummy" company on behalf of the Maharajahs. The company in Monaco is run by Mr. Nimal Cook and what reason could be attributed for such a large organization such as General Electric to use this company.

The team that was nominated for site inspection included one Mr. Jesuthasan who is a close confidante of Chairman Ariyananda. In what capacity was he included in the team?

This offer is signed by Mr. D. C. Wickramasinghe who is a close associate of the Prime Minister. It remains a mystery why this company decided to write to the Prime Minister in his capacity as the Chairman- Presidential Task Force. A project of this magnitude, should have been addressed to Your Excellency or to the Minister, Power & Energy, if not the Chairman, CEB.

In the proposal for emergency power, there is a supplement to be replaced by medium term power. (Correspondence annexed herewith). This is to confuse all relevant authorities and to distort the facts of the emergency power proposal. The price offered of Rs. 6.12 per unit for 100 MW is also expensive when compared to the price negotiated by the Government with Aitken Spence for their 2x20 MW power plant, which is approximately Rs.5.50 per unit.

Offer made by Aggreko Plc

Aggreko Plc is mainly responsible for the present crisis in the CEB. From a surplus in 1999 it is now in excess of Rs. 10 billion in debt.

Their contracts in January 2000 at Stg. Pds. 5400 per MW per week was at least 50% more than the market rate at that stage. We do not wish to highlight on how this contract was negotiated as we believe that Your Excellency is aware of all the facts.

We confirm the above fact as they are now determined to re-negotiate their present contract that lapsed in July by offering Stg. Pds. 2600 per MW per week as most of their equipment is still in the country.

Although the contract has lapsed, most of their equipment is still at the CEB sites and the balance equipment is held in the Port on the pretext of a port congestion.

After all the adverse publicity received in the press regarding this highly corrupt and unethical procurement procedure for emergency power from Aggreko, is the Government of Sri Lanka willing to run the risk of entertaining Aggreko for yet another contract?