Government likely to apply Swiss Challenge process retrospectively

The Sri Lankan government is likely to apply the Swiss Challenge process retrospectively on unsolicited projects already awarded and started at local government levels.

This is however, despite a promise that retrospective governance would not be enforced, after implementing the retrospective taxes of the 2015 interim budget hurt the investor sentiment.

Sri Lanka’s Cabinet of Ministers last month approved a proposal to include Swiss Challenge procedure guidelines into the government procurement guidelines prepared by the country’s Finance Ministry to deal with unsolicited proposals.

Finance Minister Ravi Karunanayake said that local government tenders in recent years have been corrupt.

“That’s the problem we have. Councils don’t go with any legal process. They allocated power to themselves in the past couple of years. That’s why we’re trying to bring a sense of transparency now,” he said at the 9th Doing Business Forum held last week.

Responding to a request by EcoTech Lanka Limited Chairman Anuruddha Warnakula, who said that his garbage-processing project in Kandy, for which over Rs.200 million has been invested since 2010, was halted recently, Karunanayake said that EcoTech Lanka should re-submit a tender.

However Warnakula said they bagged the project through open tender carried out by the Kandy Municipal Council in 2010.

Development Strategies and International Trade Minister Malik Samarawickrama, who was also present at the forum noted that there had been numerous unsolicited proposals in those years.

Karunanayake said that EchoTech Lanka is free to respond to a Swiss Challenge announcement that may appear on newspapers within the next two weeks.

“I think it is too late now, because there’s a Swiss Challenge that has come on for a similar thing. As a project you are free to quote for that one, you might have an advantage if you’ve done preliminary work already,” he said.

The government adopted the Swiss Challenge process recently to deal with any unsolicited proposals, where they are published on newspapers and more competitive proposals are invited.

Warnakula alleged that the Central Environment Authority (CEA) had not renewed his company’s environment licence without conducting an evaluation. A CEA official present noted that EchoTech had not submitted all the required documents.

“We gave the documents. On the same day they cancelled. They didn’t do an inspection also. After cancelling, they came and said ‘this is the best dumpsite in Sri Lanka, very sorry we cancelled’. Now they’re trying to renew it,” he said.

Karunanayake, while noting that he is not familiar with the intricacies of this incident, speculated that the licence might not have been renewed due to the project not following proper procedure in the tender.

“How it came to that point is very questionable, and that’s the reason why I’m sure they have gone subsequently in not carrying it out the way it was,” he said. EchoTech Lanka is a joint venture between Sri Lankan and Korean parties, and Warnakula said that the Korean party had conducted due diligence on the project for 6 months.