Coal Scam: SL on the verge of incurring massing losses?
Sri Lanka is facing yet another situation of incurring massing losses simply because of disregarding a Supreme Court ruling….
This time it is because of the attempts being made to go ahead with the highly controversial coal tender process at a time when Court had ruled to suspend the agreement if required.
The Supreme Court ruling
In it’s ruling, the SC noted that the transaction “Shocked the conscience of the Court” and ruled that the controversial coal tender could be terminated after giving reasonable notice to ‘Swiss Singapore Overseas Enterprises Pvt. Ltd’ adding that ‘Lanka Coal Company’ could terminate the agreement, if required.
The Cabinet paper
In this backdrop, a Cabinet Paper has been produced to continue with this controversial tender process. The Cabinet Paper was presented at a time when the final decision on the purchasing of 330,000 metric tonnes of coal needs to be made.
The Cabinet Paper has warned that if the agreement is terminated, Swiss Singapore Overseas Enterprises Pvt. Ltd would seek assistance of the International Court of Arbitration resulting in massive losses. The paper has also noted that if coal is purchased from Swiss Singapore Overseas Enterprises Pvt. Ltd, the country would make a save $07 USD per metric tonne of coal.
During an interview conducted by a newspaper, the Secretary to the Ministry of Power and Energy Dr. Suren Batagoda had said that purchasing coal from this particular company would be “more profitable than spot-purchases“. He has also added that the price of a metric tonne of coal which was imported through sport purchases was $64.77 US Dollars while the price of Swiss Singapore Overseas Enterprises Pvt. Ltd was only $58 USD.
However, according to the documents produced by Dr. Batagoda himself, and also according to the price formula for long-term coal purchases, a metric tonne cannot be purchased at $58 USD.
According to the price formula on the agreement reached with Swiss Singapore Overseas Enterprises Pvt. Ltd, a metric tonne of coal would cost $73.94.
Thereby, wouldn’t continuing with this tender with Swiss Singapore Overseas Enterprises Pvt. Limited cause more losses?
Why are they disinterested in seeking an interpretation on the court ruling?
Who has the need of further burdening the people by making profits through coal deals – as it was done through the Hedging Deals?
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