Transparency critical for strategic investments

Ceylon Electricity Board (CEB) Chairman M.M.C. Ferdinando resigned last week, three days after he claimed before Parliament’s Committee on Public Enterprises (COPE) that he was told by President Gotabaya Rajapaksa about Prime Minister Narendra Modi pressuring him to give a wind power project directly to the Adani Group. It is reported that the Indian company won contracts to develop two power projects in Poornaryn and Mannar with capacity over 500 megawatts through unsolicited proposals in December last year.

The Government has not reacted to the claim by Ferdinando but President Rajapaksa emphatically denied the allegation. The incident is emblematic of how Sri Lankan governments in recent years make decisions on mega development projects and high value purchases with a “machan culture” of deal making that has now become the norm. Recently deposed Finance Minister Basil Rajapaksa a few months ago pushed through the Cabinet an agreement which gave exclusive rights to a US-based company to provide fuel to the Yugadanavi power plant. In an unprecedented move, members of his own Cabinet petitioned the Supreme Court on the lack of transparency.

These financial transactions rather than bringing in vital investment opportunities, creating jobs and aiding the development of the country have often become drains on the public coffers and symbols of corruption. Such deals, sans transparency, also make Sri Lanka less attractive for genuine investors who would not wish to be marred in conspiracies and scandals. Further, the sustainability of such projects are compromised when they are subject to scrutiny every time there is a change in government. 

At the outset international investments are critical for a country like Sri Lanka to develop. The State sector monopoly, the CEB has done a great disservice to its consumers, who have to bear the cost of high energy prices and as taxpayers have to also bear the losses of the utility. In this regard bringing in private sector investments into the energy sector should be welcomed. Even the right thing however can be done the wrong way. The manner in which the Adani Group had been granted the power projects through an unsolicited proposal is undoubtedly the wrong way which has now cast aspersions at the highest levels of government in both countries.

Sri Lanka has been discussing the Swiss Challenge method for procurement and awarding of projects on unsolicited proposals. In this ‘best practice’ when an unsolicited proposal is received third parties are invited to match or surpass the unsolicited bid for a project while giving a degree of priority to the initial entity. This offers a degree of transparency and reduces the possibility of corrupt deals being made behind closed doors.

Former Chairman of the CEB, Ferdinando is no amateur bureaucrat to have babbled some nonsense at the COPE. He was a secretary to the Ministry of Power and Energy before being appointed as the Chairman of CEB and is well-versed in the proceedings and seriousness of parliament. Despite the hasty withdrawal of the statement, COPE now has an obligation to properly inquire into this matter. In the very least it should make public the agreement that had been reached between the Adani Group and the Ministry of Finance for the power projects. The Ministry of Finance should explain to the public the circumstances and the reasons for it to have entertained an unsolicited proposal. This scourge of corruption and culture of deal making must end.