Railway shipping deal sails into controversy
Already embroiled in a controversial decision to grant prime coastal land on a long term lease to local and foreign companies in April last year, Transport Minister Dulles Alahapperuma is now stepping into further controversy by shipping 15 diesel power units for Sri Lanka Railway (SLR) paying US $ 200,588 or well over Rs. 24 million – for the choice he made.
Alahapperuma’s choice of company is now raising quite a few eyebrows as the shipping was originally assigned to Golden Logistics Company in China. But the Minister opted for the good old Ceylon Shipping Corporation to do the honours and now, there is a fortnight’s delay in delivery due to non-availability of ships to charter the goods, despite the high price paid to the local company.
The decision to order 15 diesel multiple units was originally taken during President Chandrika Kumaratunga’s regime when Felix Perera held the portfolio of transport. Incidentally, it was also the final Cabinet Paper (05/1891/049/004-V) endorsed by Kumaratunga’s administration bearing the date, September 28, 2008.
It stated that the 15 units would be purchased from Hubei Machinery and Equipment Import and Export Corporation (CMEC) of China for a price of US$ 36,980,000. Some nine years prior to this, in 1996, Sri Lanka had also imported another 15 diesel multiple units for the Sri Lanka Railway (SLR) that are currently in use.
Higher trans-shipment fee
As per the original agreement, it was decided that the 15 units would be imported after a period of seven years at the same rates offered. It is these units that were ordered in 2005 that are now being shipped to Colombo, and that by paying a higher trans-shipment fee.
With the advent of the Mahinda Rajapakse administration, the newly appointed Minister of Transport, Dulles Alahapperuma showed significant keenness in importing the units without delay and often pledged their arrival would enhance the railway’s capacity.
It is in this backdrop that Alahapperuma submitted a Cabinet Paper (MT/55/2008) dated August 12, 2008 to ship the 15 units from China’s third largest port, Quindao to Colombo. He was eager to have them delivered to Colombo and arrangements were soon being made for the same.
What is interesting about this Cabinet Paper of Alahapperuma is that he seeks to revoke a previous Cabinet Paper which entrusted the trans-shipment of goods to a Chinese company named Golden Logistics Corporation, a Shanghai based reputed shipping company. Alahapperuma had other plans – and he wished to place his faith in the Ceylon Shipping Corporation Limited to handle this shipment.
Here lies the catch
And here lies the catch, if at all. Before requesting for this vital alteration to a previous cabinet decision, Alahapperuma has had the prudence to obtain approval to award the contract to Ceylon Shipping Corporation Limited through a Cabinet Paper (08/1159/358/039) dated July 2, 2008. Hence, it is clear that the decision to change the shipping agent was made almost one and half months before he submitted his Cabinet Paper proper.
Thus the transfer of contract to the Ceylon Shipping Corporation Limited was given prior approval by the said July 2 Cabinet Paper. It further stated the shipping of 15 diesel multiple units would be performed at a total cost of US $ 3,596,500 or in local currency, at the cost of Rs.407, 531,077.65. Nevertheless, not everyone was obviously happy with the above Cabinet Paper and it was revoked by another Cabinet Paper dated July 23, 2008 bearing No: 08/1159/358/038-1.
Herein it was strongly recommended that the delivery of diesel units should be a task to be performed by none other than Golden Logistics as the company had quoted a much lower price than the Sri Lankan company. It was clearly stated that Golden Logistics’ offer to ship the units at a fee of US $3,558,676.20 or Rs. 382,984,732.64 was more feasible. It was also emphasised that the local company was to ship one square metre at the rate of US 150 as opposed to the Chinese company offering the same service for a single dollar fee.
Reputed Chinese company
The general thinking was that by opting for the reputed Chinese company, the state could save US$ 200,588 or Rs. 24,546,345 which is by no means a paltry sum for an economy that is struggling to stay afloat.
Ministry sources claim that there was another reason to give priority to the Chinese company. At the very outset, it was conveyed by the Ceylon Shipping Corporation Limited that it was unable to allocate a ship for immediate trans-shipment of goods as per required dates.
However, the Transport Ministry next fired a fax on August 5 at 10. 30 am to the Chinese company requiring that it should offer a ship available to immediately set sail before 12 midday. Golden Logistics did respond within the stipulated time frame of one and a half hours offering Han Hong, a vessel available at the Quingdao Port in Vantai, China.
However, the ship’s manufacturing details were wrong and it was a prior requirement that the vessel that transports the goods should be less than 15 years old since the date of manufacture. From a Lloyd’s registry search, the Ministry soon discovered that the Han Hong vessel was manufactured in 1991 and was hence 17 years old.
Vessel’s age
Citing the above reason of the vessel’s age and the fact that the Golden Logistics Company would make Sri Lanka pay a delaying fee if both loading and unloading of goods took more than the specified two days, Alahapperuma was urging through his Cabinet Paper that Ceylon Shipping Corporation should be allowed to perform the task.
The Cabinet Paper quoted that if not unloaded on time, the Chinese company would levy an additional fee of US $ 20,000 (Rs.2, 200,000) per day and that the Ceylon Shipping Corporation Limited has by letter dated August 8, 2008 offered a vessel manufactured as recently as 2006 for shipment between August 25 and September 1. And so Alahapperuma’s August 12 Cabinet Paper won the day.
In the meantime, the Ministry placed much hope on the local company to perform the task on time. And now, the 15 diesel multiple units are being shipped to Colombo in batches of three over five times.
On September 18, the second batch was expected at the Colombo port but due to non-availability of vessels with the Ceylon Shipping Corporation Limited, delivery had been differed. It is now hoped that the delivery of the remaining units will take place in October after a new schedule is created.
In the meantime, the SLR workers are raising eyebrows over the haste in which the units were to be shipped and at high cost when a cheaper and more reliable option was available. Repeated attempts by The Sunday Leader to contact Minister Dulles Alahapperuma over the week proved futile.
Workers opposed – Unions
According to Chairman, All Ceylon Railway Workers General Union, S.P. Vithanage the railway workers were opposed to this decision.
“At a time when Minister Alahapperuma has failed to address corruption and remove the corrupt officials from a department coming under his purview, how can he uplift the railway by leasing SLR lands and finding expensive ways to transport diesel multiple sets to Colombo,” he demanded. Vithanage alleged that successive governments have so far failed to develop the SLR despite lofty claims of wanting to do so.
Ownership lost
There are over 4,000 lease agreements between SLR and other parties that were not duly renewed and this had cost the SLR not just monetary losses but also the loss of legal ownership. According to reliable SLR sources, there are some 6,780 lease agreements under the 99-year lease scheme alone. The SLR has maintained only 2,400 files in respect of these agreements.
“The rest have been acquired as a result of the SLR’s failure to renew the lease agreements on time and in fact, the SLR had lost legal ownership of certain lands due to non-renewal of lease agreements on time,” sources confirmed.
Perhaps the best option – Sri Lanka Railway
Senior officials of the Sri Lanka Railway (SLR) said that there would have been sufficiently good enough reason for the Minister to select the local company over the Chinese one though the quoted shipping fee was much higher.
“The transport charges, for starters, will remain in Sri Lanka. Perhaps it was considered best not to enrich a Chinese company when there is a local company that could perform the same service though at a higher fee,” officials added.
Unexplainable says JVP
A JVP trade unionist from SLR speaking to The Sunday Leader claimed that Alahapperuma’s diesel engine transportation scheme was simply unexplainable.
“First, there was a Cabinet Paper in violation of the Mahinda Chintana to hand over state lands on long term leases to local and foreign investors. It was blasphemy to come up with such a proposal and now he transports diesel multiple units from China to Colombo at high cost overlooking cheaper options,” he said.
The trade unionist claimed that even the blind could see when a cheaper option is overlooked for an expensive one, as in this case.
By Dilrukshi Handunnetti
Source: The Sunday Leader
