CEB engineers write to US Embassy over New Fortress LNG deal

• Say govt.’s decision to entertain New Fortress’ unsolicited proposal undermines official LNG procurement process
• Only two bids were submitted though 22 prospective bidders have purchased bidding documents

The Ceylon Electricity Board Engineers’ Union (CEBEU) has sought the intervention of the United States Embassy in Colombo to halt the moves to award the exclusive LNG supply contract to US-based New Fortress Energy, circumventing tender procedures.

Although the Ceylon Electricity Board (CEB) called for bids to set up LNG infrastructure and procure LNG for the country’s power sector, as per the National Energy Policy and Strategies gazetted in 2019 and Sri Lanka Electricity Act No. 20 of 2009, the CEBEU in its letter to outgoing US Ambassador Alaina B. Teplitz alleged that the government’s decision to entertain the unsolicited proposal of New Fortress Energy had undermined the official LNG procurement process.

“..due to the fact that the government had seriously and publicly entertained the unsolicited proposal that you had forwarded from New Fortress Energy to set up an LNG terminal at a time competitive tenders are also called for the exact purpose, it had completely eroded any remaining confidence investors has in power sector projects,” the letter stated.

Following this development, the CEBEU pointed out that only two bids were submitted although 22 prospective bidders had purchased the bidding documents.

The union stressed that transparency is critical, which is stipulated in the current guidelines and laws to ensure least cost power generation for the public. In particular, as the US Embassy itself was involved in forwarding this unsolicited proposal to the government, the CEBEU cautioned that this might reflect badly on the US.

“We are most certain you too would agree with us that parallelly entertaining the unsolicited proposal that you have forwarded from New Fortress Inc. at a time competitive bids are invited for the same purpose does not auger well with transparency and good governance. 

Ambassador of a country that is known to stand for free trade, transparency and democratic principles, we are of the view that the current discussions taking place in society as a result do not go well with the reputation of the great country you are representing,” the letter noted.

According to the definitive agreement announced by New Fortress, the company would acquire a 40 percent ownership stake of West Coast Power Limited (WCP), the owner of the 310 MW Yugadanavi Power Plant, with plans to build an offshore LNG receiving, storage and regasification terminal located off the coast of Colombo. 

 Further, New Fortress would initially supply the equivalent of an estimated 1.2 million gallons of LNG per day to the government, with the expectation of significant growth as new power plants become operational.

Meanwhile, launching trade union actions against the deal, the CEBEU has resorted to a picketing campaign this Wednesday, in front of the CEB head office and other CEB trade unions are also expected to join this campaign.

Further, the CEBEU has cautioned the authorities with more stringent trade union actions, if the government decides to ignore the ongoing international competitive CEB tender and goes ahead with the unsolicited proposal of New Fortress.