Indian company’s withdrawal of renewable energy project in Jaffna sparks controversy

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An Indian company is now at the centre of a controversy in Sri Lanka over the government’s decision to award the contract for the construction of hybrid recycled power plants on three islets in the northern Jaffna district even after their withdrawal of the bid from the relevant tender.

The cabinet meeting on Monday decided to award the contract to U Solar Clean Energy Solutions (Pvt) Ltd to build hybrid recycled power plants in Delft, Nainathivu, and Analathivu, cabinet spokesman minister Bandula Gunawardena disclosed.

The decision came after a competitive bidding process that was limited to Indian suppliers only and was initiated after India provided a US$11 million grant for the project, a cabinet memorandum said.

According to the cabinet paper, the contract was awarded to India’s U Solar Clean Energy Solutions after a thorough evaluation by the cabinet-appointed procurement committee.

The government of India had given its consent to provide the Sri Lanka government a sector grant of $11 million for supplying electricity to residents of Delft, Nainathivu and Analathivu islets of the Jaffna peninsula.

Accordingly, bids have only been called from Indian contractors to implement that project as per the conditions of the memorandum of understanding entered into.

The Cabinet of Ministers approved the proposal submitted by the Minister of Electricity and Power to grant the contract to U – Solar Clean Energy Solutions (Pvt.) Ltd. based on recommendations furnished by the standing procurement committee appointed by the Cabinet of Ministers after the evaluation of the proposal.

Creating confusion on the renewable energy project deal, CEO and Director of U – Solar Clean Energy, K.R Harinarayan in a letter dated 17-11-2023 informed the Director General Procurement Committee Department of the Sri Lanka Sustainable Energy Development Authority that his company has formally withdrawn their bid submitted on 27-10-2023 from the project tender.

He further noted that they have taken this decision after careful consideration and reassessment of their current commitments and resources (dollar rates) and they are unable to proceed with the bidding process

Interestingly the cabinet of ministers has taken a decision to award the contract to this Indian company which has already withdrawn from the bidding process creating confusion among the public.