Sri Lanka Brief
FeaturesState Secret Report no. 1: President has taken a 50% commission from the Norochcholai project

State Secret Report no. 1: President has taken a 50% commission from the Norochcholai project


Norochcolai exclusive eThe Government Servants Against Corruption organization says with great responsibility that President Mahinda Rajapaksa had taken a 50% commission from the Chinese company that was assigned the project to construct the Norochcholai coal power plant.
Several senior government officials and some senior state officials who are now in retirement have formed a group that would release details corruption among the high ranking government officials. The reports are to be released under the name “state secrets” (rajya rahas).
In the first paper released by the group on Norochcholai states details about a Rs. 15,000 million (Rs. 1.5 billion) fraud committed by the President in the construction of the Norochcholai coal power plant.

The organization has revealed that the President had verbally intimidated the officials involved in the project and the Chinese ambassador to pay him the monies.

The first agreement on the Norochcholai coal power plant was signed on August 27, 2005 in China. Five agreements on the Norochcholai coal power plant, the bunkering project in the Hambantota Port, Colombo-Katunayake expressway, the Lotus Pond Theatre and the electric railway line from Katunayake to Colombo were signed that day with the participation of former President Chandrika Bandaranaike Kumaratunge. Relevant ministers and ministry officials were also present at the occasion. Finance Ministry Secretary Dr. P.B. Jayasundera was one of the key government officials present at the time.

Before signing the agreements, the necessary feasibility studies and financial surveys had been carried out for several years. The agreements were then drafted in a manner that would benefit Sri Lanka. Accordingly, the Chinese government has agreed to a loan of US$ 280 million on a 0.5% interest to be paid back within a period of 30 years for the Norochcholai coal power plant.

It is interesting to note that the day before these agreements were singned, on 26th August 2005, then Cheif Justice Sarath N. Silva had decided that President Chandirka Bandaranayake Kumarathunge must resign from her post within year 2005.  In this backdrop, the President had asked the Chinese government to ensure that the foundation stones for these projects are laid within three months after signing the agreements. The President had also asked the Chinese government not to pay any commissions or bribes to any officials in connection to the projects and to get the services of world renowned construction companies to carry out the projects. The Chinese government has accordingly enlisted the services of a well known Chinese construction company to assign the Norochcholai coal power plant project.

However, after assuming office as the President in 2005, Mahinda Rajapaksa had summoned the senior officials of the Chinese construction company in 2006 and informed that he needed a payment of 50% of the project cost. Shocked by the request, the Chinese officials have said that the profit share for their company from the project is estimated at 25%. However, the Chinese have said that the company usually pays 3% of the project value as commission and would therefore be able to pay a maximum of 5% as commission in this instance.

An angry President had then shouted at the Chinese saying, “If you can’t work the way I want, you better get out.” The Norochcholai coal power plant project was then delayed for a period of two years until a suitable construction company was identified for the project. Dr. Jayasundera had then met with the Chinese government officials on several occasions and pleaded with them to find another construction company for the power project. However, all Chinese construction companies with experience to build coal power plants had rejected the offer saying they were unable to make such a massive commission payment.

Nevertheless, the Chinese embassy in Colombo had decided to introduce a second level Chinese construction company, Chinese Mechanical Engineering Company (CMEC) to construct the Norochcholai coal power plant in order to prevent the Sri Lankan government from getting closer to India due to Minister Basil Rajapaksa’s links with neighbouring India.

It was Dr. Jayasundera and Power and Energy Ministry Secretary M.M.C. Ferdinando who had maintained direct contact with the Chinese construction company on behalf of the President. Ferdinando had told the Chinese company that the amount requested by the President had to be paid and that the government did not have any issue with the mark up of the project value. Therefore, apart from paying 50% commission to the President, CMEC had also kept a 30% profit margin from the project.

As a result, the project that should have been completed with US$ 280 million was increased to US$ 510 million. The increase in the project cost was US$ 230 million. CMEC officials and Chinese embassy officials in Colombo have confirmed that the President was paid Rs. 1.5 billion as commission money.

Although the Norochcholai coal power project was completed by a second level Chinese construction company, the power plant has caught fire on three occasions and had broken down on four occasions. The president had then ordered Power and Energy Ministry Secretary Ferdinando to sell off the coal power plant at whatever cost. Ferdinando had then informed the Chinese embassy to find a buyer for the coal plant. The Chinese officials who are aware of the quality and standard of the plant have refused to intervene in the matter.
Once of the reasons for Power and Energy Minister Champika Ranawaka’s removal from the portfolio since he continuously questioned about the inefficiencies of the Norochcholai coal power plant.

The President who had taken a bribe of Rs. 1.5 billion for the first phase of the Norochcholai coal power plant has marked a price of US$ 1,350 million for the second phase of the project that would add 600MW to the national grid. The lowest bid of US$ 800million has been presented by a Japanese company. Power and Energy Minister Champika Ranawaka was removed from the portfolio before he could hand over the project to the Japanese company. Current Minister Pavithra Wanniarachchi has approved the project at US$ 1,350 million. However, no one knows how much of the additional US$ 550 million would be paid to the President.


Back to Top