CEB engineers rattled by govt.’s unsolicited deal with US firm for LNG infrastructure

• Say the move completely uncalled for as a competitive tender process already in motion
• Warn lack of transparency could result in potential delay in obtaining required LNG infrastructure 
• CEB plans to generate 20% of the country’s electricity via LNG sources by 2030

By Nishel Fernando
The Ceylon Electricity Board Engineers’ Union (CEBEU) said they are on high alert over a possible delay that could occur in obtaining the required LNG supply to the country in a transparent manner as the government is moving ahead to strike an unsolicited deal with a US-based company for a floating LNG terminal and pipeline amid a competitive tender process. 

“During the tender process, the Ministry of Finance has unexpectedly entered into another agreement with a US company to obtain the LNG required for our country with the approval of the Cabinet of Ministers.  As a responsible trade union we strongly condemn this. As a result of this action, the systematic process of obtaining the proper supply of LNG to our country without delay is at a risk,” CEBEU officials told reporters in Colombo this week.

Following an 18-month feasibility study sponsored by the Asian Development Bank (ADB), CEB floated tenders in February this year to build the country’s required LNG infrastructure, which included a floating storage and regasification unit (FSRU) to be built on a 10-year build-operate-own basis and pipelines on build-operate-transfer basis. The tender was opened on June 25, 2021, and around 20 parties had taken bid documents prior to the tender, according to CEBEU.

CEBEU President Saumya Kumarawadu claimed that one week extension to the tender deadline was not sufficient as some other smaller tenders were granted up to 5-6 weeks of extensions in the wake of the COVID-19 third wave in the country.

According to the latest draft of long-term generation expansion plan, the CEB plans to generate 20 percent of the country’s electricity via LNG sources by 2030.

However, US-based New Fortress Energy (NFE) early this month announced that it had signed a framework agreement with the Finance Ministry to build an offshore liquefied natural gas (LNG) receiving, storage and regasification terminal off the coast of Colombo, and rights to supply gas to the existing 300 MW Yugadanavi power plant.

Condemning this move by the government, Kumarawadu said the government has put other prospective bidders at a rather uncomfortable spot by entertaining and approving an unsolicited proposal instead of following the competitive bidding process already in motion.  The CEBEU vowed that it would closely monitor and would not hesitate to take required actions if there were any irregularities in the process of sourcing LNG for the country. 

“The CEBEU is on high alert regarding the tender process that should be carried out in accordance with the stipulated policy of obtaining LNG for the country, and if any irregularity is observed CEBEU will not hesitate at all to take all possible actions as a trade union,” Kumarawadu stressed.