Sri Lanka coal tender runs into controversy, warnings of extended power cuts | Sinhala News

Sri lanka News – A company which was awarded a contract to supply coal on credit has refused go ahead until legal clearance is given, the Power & Energy Minister said after the deal ran into controversy and some activists went to court.

The supplier “had decided to suspend performing the contract awarded to them until legal clearances were given,” the energy ministry said.

“Met with the officials of the Lanka Coal Company yesterday and the contract awarded suppliers to discuss the issues related to the Coal Procurement for the Lakwijaya Power Station,” Power Minister Kanchana Wijesekera said.

“Contingency plans were also discussed to procure the coal requirements for next season if the awarded suppliers are not able to supply the requirements.”

According to information now in the public domain, a company called Black Sands Commodities FZ LLC based in the UAE was given the deal to supply 4.5 million tonnes of coal from Vanino Port, Russia.

It was supposed to supply coal at a base rate of 295.22 US dollars and 33 dollars a tonne for freight.

The deal was supposed to be for seasons 2022-2023, 2023-2024 and 2024-2025. Critics have said the price was too high.

However the firm had agreed to give six months credit. Sri Lanka has a tendency to buy fuel on credit when the central bank prints money to create forex shortages.

Minister Wijesekera defended the deal in parliament saying the supplier was the lowest responsive tender.

“On July 21 we called for the tenders,” he told parliament on August 08. “And on Aug 10 we closed it. Two companies responded to the tender. One company said they will give one ton for 328 US dollars.”

There were also unsolicited proposals. One was from a company called CMEC-Browns who had offered coal at 554 dollars per tonne, he said.

The firm had asked payment 50 percent in US dollars and 50 percent in rupees or yuan. There was another proposal for 526 dollar a tonne.

“After the tender closed, two days later CMEC sending another proposal says they can give us coal for 285-290 US dollars,” he said.

“After looking at the tenders they have reduced the amount and then they say to pay 50 pct in US dollars and 50 percent in rupees, that is also after 5 years,” he claimed.

“After closing a tender, we can’t go and give the order to another person.”

Meanwhile Public Utilities Commission Chairman Janaka Ratnayake said current coal supplies were enough to generate power till October 2022.

Ratnayake said he was not commenting on the tender process, but coal had to come in to avoid power cuts as without it, 900MW would go out of the system forcing the Ceylon Electricity Board to cut power.

“The coal we have in have is enough only till October 25,” Ratnayake said. “The tender has been awarded but due to a court case some complications have arisen. If we cannot secure a supply before October 25, we will have to close all three coal power plants,”

There are two more shipments to arrive from an earlier tender. Officials will need 50 million US dollars to clear the two shipments. (Colombo/Sep11/2022)

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