This is going to be rather dry, but interesting. I may throw in a fun line or two:). This post attempts to provide my opinion based on factual information which I actually came across online at the same time i provided you with the link 'srilankan treasury confirms project in finance' you should read that post before reading this one. I had kept this one up my sleave, and planned to release it to you on the 1st April. Although this information may or may not have ben highlighted previously, this information is not in any form, 'classified' or 'market sensitive' as I believe it is available to anyone, accessible to the public for viewing at any time of the day. I am attempting to make this brief and condense the info i have found, I will provide a link below and please make your assesments and disagree or challenge anything.
What this ANN covers is guidelines in which The Srilankan Treasury will assess investment projects, its financial viability, agreements, MOU's, how these are agreed
and approved within the Srilankan Government. It involves
-The Srilankan treasury (department of public finance of Srilanka)
-the Standing Cabinet Appointed Review Committee (?SCARC?)
(please refer to MDV ann released 21/12/10 9am)
-the Srilankan ministry of health, cabinet ministers
-the srilankan technical evaluation commitee
We know through a MDV ANN the MOU came about as (?SCARC?) committee?s acceptance that a conceptual proposal based upon the Metamizer 240 SSS presented by CME Medical Pty Ltd, was beneficial for the economic development of Sri Lanka.
The next process which gets interesting and in my opinion has not been explained to us properly is to whether the
Treasury and public finance either 'proceed or refrain' with the supplier's proposal.
Now the key here is that the SCARC has to work with the Technical evaluation committee after having discussed this proposal. The deal gets alot more complicated at this stage in my opinion than what we are led to believe.
At this point, in my opinion the negotiations have just begun. We may not be on the 'brink' or 'cusp' of anything just yet. All that we have established at this point is that the srilankan government as a whole through the SCARC
and ministry of health the proposal for metamizers are benefical for the economic development of
Srilanka, nothing more.
From here the SCARC makes the assessment, with the 'assistance' of the technical evaluation committee.
Now weren't we all told that the technical evaluation committee was making the final evaluation?
The SCARC can either decide
1)-the proposal does not contain enough merit for further proceeding and therefore can 'refrain' from
proceeding with the proposal.
OR
2)-the proposal deserves consideration to proceed, the ministry of health and the investor (can be recommended to proceed the project proposal but first having proceded with a competitive bidding process. This then has to be submitted to the Chairman of the
SCARC, along with the observations of the National Planning
Department and the External Resources Department,
requesting advice of the SCARC on the way forward.
NOW
if No. 1) is the decision, they just refrain from proceeding and there is no deal.
if No. 2) is the decision, this has to be based on ONE or MORE of the following reasons
- the strategic importance of the proposed project which
would ultimately be of benefit to the economic
development of the country; (TICK - YES - SCARC's original approval)
b. the implementation of the project is well within the
planned development programs of the Government in
view of the technical details provided; (****WE cannot be sure of yet)
c. the expected transformation of superior knowledge/ knowhow through the proposed Project , that is otherwise not available through alternative arrangements; (****WE cannot be sure of yet)
d. the substantial inflow / savings of foreign exchange to the country; (TICK - YES - Australian government loan)
e. overall conditions attached to the financing and Project
implementation being acceptable/ attractive and there is
evidence of firm commitments on the part of financiers; (TICK - YES - Australian government loan)
f. Deviations from the competitive bidding procedure
stipulated in the Guidelines on Government Tender
Procedure is justifiable, (Only competitor is Finlays but****WE cannot be sure of yet)
NOW - Financing
- project financing terms should extend at least with a 15 year repayment period including at least a 3 year grace period. 15 Years??? yes thats right, the Australian government will be repaid in full within 15 years. Is this what you all understand this to mean?
NOW ALSO - for the deal to fall through, there should be a
?no objection? obtained from the Central Bank of Sri Lanka regarding the external financing terms.
You can already see how much more that has to happen for this deal to go through.
Now this is where the MOU gets interesting.
The MOU consists of all the above agreements. Yes we have been told this has been signed. I am happy with that.
But what we need to understand is the level of committment by all parties here. What I now know is the contents of the MOU which is as follows
- The parties and the validity 'period' of the MOU - (which suggests to me there is a timeframe)
- if conditions stipulated in the MOU are not met within
the agreed timelines, the MOU shall cease to be operative and that it will not give rise to any legally enforceable obligations ( Yes thats right, it will cease if any party
does not meet agreed conditions and timelines as per above)
-that negotiations will not be held with third parties during the pendency of the MOU
-payment timeline and payment modalities, after having
consulted the Treasury in that regard ( this goes back to the 15 years i was talking about previously, will the
Australian government accept this??)
-other appropriate terms and conditions.
If all the above goes to plan the project should then be proceeded with subject to generally applicable procedures through the relevant agencies as approved by the Cabinet of Ministers.
Yes people, if all the above is agreed, the deal will go ahead. Did i here shipping April/May?
This factual information provided by the 'Democratic Socialist Republic of Srilanka' is viewable
online issued on the 16th, May 2011 at the following address (yes i heard the clunking sound of your jaw drop
when you read the 16th of May 2011)
http://www.treasury.gov.lk/FPPFM/pfd/publications/ProcuManSupple23E.pdf
