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<\/a>The Koreans put forward their original bid on Sri Lanka\u2019s request, made during President Maithripala Sirisena\u2019s official visit to Seoul in 2017. While it came as a bilateral, Government-to-Government project, the Power and Energy Ministry insisted on having it redrafted as an RFP and floating it as a Swiss Challenge, said Dr Batagoda. WorleyParsons, an Australian energy consulting company, was hired along with Allen & Overy, an international Law firm. Sri Lanka\u2019s interests were represented by a local Law firm.<\/p>\n
The consultants were paid by SK E&S but should the contract be awarded to another bidder, the winner will have to meet these fees. \u201cThe Swiss Challenge procedure is that, the development cost and RFP preparation cost has to be borne by whoever wins,\u201d Dr Batagoda said.<\/p>\n
SK E&S were nominated by the Korean Government, the Secretary said. Their proposal was negotiated and vetted over a period of nearly 2 years by a Joint Working Group that included all stakeholders, including the Ceylon Petroleum Corporation (CPC) and CEB.<\/p>\n
\u201cEvery single point was negotiated,\u201d he said. \u201cEvery term was debated and fought over till this was converted into an international RFP. It was not biased towards Korea. The idea was to have an open tender.\u201d<\/p>\n
Days after the RFP was advertised, Dr Batagoda said, a pre-bid meeting was called, which was attended by, among others, American and Norwegian entities. \u201cWe asked the prospective bidders to tell us anything which might be biased towards the Koreans,\u201d he said.<\/p>\n
One objection was that the financial capacity required of the bidder was too high. It was agreed to lower this. It was also accepted to change the requirement from a \u201cnew\u201d FSRU to any other, provided the vessel was certified by a body such as Lloyds Register as having a minimum, 20-year lifespan.<\/p>\n
Dr Batagoda said it was coincidental that the Swiss Challenge was advertised just days after President Sirisena sacked Prime Minister Ranil Wickremesinghe. Negotiations had just ended, so the Ministry went ahead. Also, when parties at the pre-bid meeting requested a one-month extension, it was granted.<\/p>\n
Meanwhile, the Petroleum Resources Development Ministry was separately engaging with Indian and Japanese parties for another FSRU and LNG supply contract. Dr Batagoda contradicted widespread industry views that the country does not need two FSRUs. The India-Japan one would feed gas to 2 LNG power plants they were building.<\/p>\n
\u201cWe need 2 terminals,\u201d he insisted. \u201cWhy? If one terminal breaks down, what do you do? If 1 terminal is under maintenance or service, what do you do? Do you close the power plants? No. Who cares about 2 terminals, 3 terminals? They\u2019re invested by a private company. We don\u2019t invest. We are not worried about 1 terminal or 2 terminals. We are worried about the rate levied on turning LNG to gas. We have said we will not pay more than what India or Pakistan or Bangladesh pays for it.\u201d<\/p>\n
The Swiss Challenge was being opposed by \u201cbusinessmen who want to get a monopoly,\u201d Dr Batagoda insisted. He also said takeor-pay contracts were common in the Power and Energy industry. The CPC ordered 6 shipments of diesel for power plants last year. \u201cThen we got enough rain and were using hydro, so we didn\u2019t need the diesel,\u201d he said. \u201cBut we had to pay. We didn\u2019t buy the diesel, but we had to pay. If you order, you have to pay.\u201d<\/p>\n
If the CEB was not taking some of the LNG that is being ordered, the joint venture company being set up under the contract could choose to re-sell it \u201cor do something to make sure nobody pays money for nothing,” Dr Batagoda said.
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