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Yugadanavi agreement with New Fortress Energy: Non-disclosure agreement under fire

13 Nov 2021

 
  • Treasury cannot sign non-disclosure agreement since it’s public monies: Rajapakshe
  • Deal not transparent, public doesn't know what's happening to public properties: Jayalal
  • AG's opinion sought on agreement to present it to Parliament: Ferdinando
By Maheesha Mudugamuwa The controversy over the Yugadanavi Power Plant deal between the Government and US-based New Fortress Energy Inc. (NFE) has further deepened following a recent revelation that the Treasury had entered into a non-disclosure agreement (NDA) with the US-based energy company.  As learnt by The Sunday Morning, the two parties signed an NDA with regard to the share sales and purchase agreement over the power plant. Therefore, the clauses and conditions of the agreement were yet to be made known to the Cabinet, Parliament – with which the power of public finance had been vested – and the general public. However, in the wake of recent protests over the controversial deal and pressure by Opposition MPs, it is learnt that the Treasury had sought the opinion of the Attorney General (AG) over disclosing the contents of the agreement. Speaking to The Sunday Morning, Advisor to the Treasury and Ceylon Electricity Board (CEB) Chairman M.M.C. Ferdinando said the first agreement, which is the framework agreement signed in July, was already in the public domain, and explained that thus, the issue arises only with regard to the other agreement, i.e. the share sales and purchase agreement, as the Treasury had signed an NDA with the concerned party.  He also said the Treasury had already sought the AG’s opinion over tabling the agreement in Parliament. Ferdinando said since the matters were of commercial importance, the Government was carefully considering it.  In July, NFE announced the signing of a framework agreement with the Government of Sri Lanka to build an offshore LNG receiving, storage, and regasification terminal located off the coast of Colombo, and rights to supply gas to the existing 300 MW Yugadanavi Power Plant. NFE will utilise this same LNG terminal to supply natural gas to the new 350 MW power plant. According to the agreement, NFE will build floating storage in the sea to store LNG and a pipeline to transfer LNG from that storage facility to Yugadanavi.  The Yugadanavi Power Plant, which has a capacity of 300 MW, was constructed by Lanka Transformers Ltd. (LTL: a joint venture between the CEB and Bonar Long of Scotland), and is owned by West Coast Power Ltd., of which the owners are the Treasury (51%), Employees’ Provident Fund (EPF) (27%), Lanka Electricity Company (LECO) (18%), and LTL (4%).  In September, the Cabinet approved a controversial share transfer of the 300 MW Yugadanavi Power Plant to NFE. Accordingly, the Finance Ministry had agreed to transfer a 40% stake of the power plant owned by the Treasury to NFE together with the rights to supply natural gas to Sri Lanka. It is learnt that through the transaction, the Treasury would raise nearly $ 300 million.  However, the signing of an NDA by the Treasury with the US company was criticised by lawmakers.  When contacted, Sri Lanka Podujana Peramuna (SLPP) Lawmaker Dr. Wijeyadasa Rajapakshe PC said the Treasury cannot sign NDAs, as they deal with public money and therefore, they should submit the agreement to Parliament.  If the Government disregards Parliament and goes ahead with the deal, it would have to take the responsibility, MP Dr. Rajapakshe said, adding that the responsibility would lie with those involved in the deal, including the President and the Prime Minister, rather than the Government.  Explaining further, he said that, being a public entity, the Treasury cannot enter into private agreements and sign NDAs, as it was accountable for how it utilised public money and therefore, should be transparent as well as get the approval of Parliament in such instances.  Meanwhile, a joint protest was recently staged by 11 constituent parties of the Government, trade unions (TUs) of the CEB, and affiliated trade unions attached to the Ceylon Petroleum Corporation (CPC) and Sri Lanka Ports Authority (SLPA), against the recent agreement reached between the Government and the US company with regard to the Yugadanavi Power Plant.  Speaking to The Sunday Morning, Janatha Vimukthi Peramuna (JVP)-affiliated Lanka Viduli Sevaka Sangamaya (LVSS) General Secretary Ranjan Jayalal urged the Government to respect the existing and approved electricity policy frameworks developed by the CEB engineers, who are experts in the field, and also to adhere to the government-approved tender process for the LNG supply without going ahead with unsolicited proposals.  He also alleged that the Treasury had not obtained the approval from other shareholders – the EPF, Lanka Electricity Company (LECO), and LTL – for the share transfer.  Furthermore, Jayalal stressed that these deals were not transparent, and that the public not knowing what the Government is doing with public assets, was one of the biggest problems at present.  “They are desperately looking for dollars and selling whatever possible to earn dollars and at the same time, they have fallen victim to geopolitical issues between China and the US,” he added.  Elaborating further on the severity of the matter, CEB Engineers’ Union (CEBEU) President Saumya Kumarawadu said that out of nearly 1,400 proposed LNG power plants, 1,000 were planned for the Kerawalapitiya Power Station, which was now to be given to a US company. “We haven’t seen any agreement as yet and we still don’t know the conditions,” he said. Meanwhile, Power Minister Gamini Lokuge said a copy of the agreement that the Government signed with NFE and other documents pertaining to tenders will be tabled in Parliament this week.


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