Lanka Thriposha’s Rs. 271mn soya-maize deal rattles the industry

Amidst allegations of procurement outside tender process

by Suresh Perera

A move by Lanka Thriposha to procure one million kilos of soya bean and three million kilos of maize at a cost of Rs. 271 million outside tender procedure has sent shockwaves through the industry, with officials asserting that other players in the business have been left out in the cold.

With the soya harvesting season now in progress, farmers are selling a kilo at Rs. 85, but the price quoted by this particular supplier is Rs. 130 per kilo, which translates into a hefty margin of around Rs. 40 million, they claimed.

His profit is the government’s loss as it is no secret that during this period stocks can be procured at a competitive price from any supplier in the trade, the officials explained. "In addition to soya bean, an order to supply three million kilos of maize has also been placed with the same party".

In 2014, prices soared due to a scarcity as a result of the drought and available stocks were snapped up by suppliers and sold for Rs. 130 per kilo, making a marginal profit of Rs. 10 on each kilo, which also absorbed storage and transport costs, the officials said.

In terms of the December 1-31, 2014 to May 2-15, 2015 Technical Evaluation Committee (TEC) Report of Lanka Thriposha, a wholly-Treasury funded venture under the Health Ministry, four of the five suppliers had quoted Rs. 130, but the situation has now changed with a bountiful crop this season.-

Fresh bids to procure stocks should have been called in June-July, 2015 before the onset of the harvesting season, but this was not done for some inexplicable reason. The end result was the sudden decision to procure this enormous stock from a single supplier outside the tender process, industry players noted.

While growers, who have invested millions of rupees on establishing processing factories, procuring costly machinery and maintaining storage facilities, have been left in the lurch, 1,000 metric tons are being purchased at an inflated price from another party, they complained.

This particular supplier registered as a ‘Govi Madyasthanaya’ is a subsidiary of Wayamba Traders, a large-scale business organization, which is into the ‘buying and selling’ trade in a big way and is also an importer and re-exporter of arecanut to India. It also supplies commodities such as potatoes, onions and dhal to a government-owned chain of supermarkets, they asserted.

Unlike growers, middlemen, who merely buy and sell, don’t invest heavily on storage facilities. For example, they transport stocks purchased in Anuradhapura directly to Colombo at a cost of Rs. 22,000 on a 17,000 kilo container load, they pointed out.

Asked why two such big consignments were being procured outside tender procedure, Lanka Thriposha Chairman, M. D. Bandusena denied any irregularity in the purchases.

Lanka Thriposha is purchasing from a regular bidder who supply stocks to the company, he said. "There is nothing wrong with that".

"What is wrong is that this bidder was handpicked outside tender procedure. In the TEC report (up to May 15, 2015), he had tendered to supply 650 MT of soya bean and 1,200 MT of maize", industry officials asserted.

The Chairman assured that media advertisements calling for fresh bids will be placed by next Sunday.

That’s long overdue — it should have been done in June or by July, the latest, as is the regular practice so that suppliers could have responded on time for the technical evaluation of their stocks, the officials countered.

"There is a shortage of soya in the local market", Bandusena continued.

With other bidders shut out, there will be sufficient stocks for a single supplier to snap up and sell at an inflated price, industry players noted. "There won’t be a dearth as five other prospective bidders have been elbowed out".

"We have been advised to remain silent on this issue", they claimed. "After all, there are people who have to recover what they spent on elections".


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