Cabinet turns down Rs 200mn for rent for building for Ministry of Power and Energy; but provides backdoor funding from LECO

Cabinet turns down Rs 200mn for rent for building for Ministry of Power and Energy; but provides backdoor funding from LECO

Written by Staff Writer

24 Jul, 2019 | 10:12 pm

Colombo (News 1st): The cabinet memorandum submitted by subject minister Ravi Karunanayake seeking approval to obtain funds from the Treasury to obtain a new building on rent basis to relocate the Ministry of Power, Energy, and Business Development was turned down for a second time, yesterday (July 23).

The current premises which the Ministry is being housed since 2009, belongs to the Ceylon Worker’s Congress, and a rent of Rs. 74 is paid per square foot. Although the rent agreement on this building can be extended from the 1st of next month, the Ministry intends to relocate to this premises situated in Colombo 2 by incurring a rent cost of Rs. 260 per square foot per month.

However, the proposal presented to the Cabinet by the subject minister clearly states that certain bid conditions of the building are not compatible with those published by the Ministry. Therefore, choosing this building which does not even fulfill bid conditions could have been done in order to please a relevant party.

In the past, a private company utilized this premises paying rent for a total of 38,000 square feet. Against such a backdrop, the Ministry of Power, Energy, and Business Development entering into a rent agreement for 44,410 Sq is a cause for concern.

These clauses included in the recommendation states that a deposit amount of a year’s rent would be paid, and a total rental for 5 months upfront would also be paid, merely depicts the subject minister’s intention to please a certain party.

Had the Cabinet of Ministers approved this proposal, presented by the subject minister, the amount of public funds which the treasury would have had to release would be in excess of over Rs. 200,806,000.

The Minister of Finance while opposing to release the funds from the treasury had reminded the cabinet of the decision taken by the government to not spend on obtaining new buildings on rent in order to house government agencies.

However, the Cabinet granted a surprising approval to the Minister of Power yesterday. That is, to obtain the Rs 200,806,000.00 from the Lanka Electricity Company or LECO. This company falls under the Ministry of Finance. According to the good governance guidelines published by the Department of Public Enterprises, public enterprises are not permitted to incur expenditure or deploy its resources under any circumstances, on behalf of the line ministry or any other govt. institutions.

Further, since LECO is registered under the Companies’ Act, it has been legally prohibited to provide its resources for the benefit of others apart from its stakeholders. 54% of shares of LECO are owned by the Ceylon Electricity Board while 44 percent is owned by the Treasury.

Thus, it is evident that the granting of cabinet approval for the Ministry of Power to obtain these premises from the funds of LECO is merely obtaining funds from the Treasury.

By obtaining an amount exceeding Rs 200 million from LECO, which squandered around Rs. 400 million in an attempt to lay underground electricity lines, isn’t the Ministry attempting to provide LECO with the same fate which befell the Ceylon Electricity Board?

Minister of Power and Renewable energy, for your attention.

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