Longer power cuts likely in Sri Lanka if coal shipment not secured: union | Sinhala News

Sri lanka News – Sri Lanka, currently enjoying a respite from hours-long daily power cuts, may soon go back to enduring extended outages if the Ministry of Power & Energy fails to secure a sufficient supply of coal by end October, the Ceylon Electricity Board Engineers Union (CEBEU) said.

The UAE-based Black Sands Commodities FZ LLC, which was awarded a contract to supply coal on credit, has refused to go ahead until legal clearance is given. After some activists went to court, officials are now raising concerns of daily power cuts lengthening in duration after weeks of shorter cuts of just one hour since early August. Sri Lanka endured power cuts that went for as long as 13 hours a day in Marchl this year as the country moved deeper into a worsening currency crisis.

The recent reduction in power cut length was due to the increased availability of hydroelectricity that followed heavy rains.

According to authorities, Sri Lanka currently has enough coal till October 25.

CEBEU President Anil Ranjith said the main grid will lose at least 810 megawatts if the coal shipment does not arrive on time.

“Even if we depend on renewable energy power plants, we have to do it very carefully. If the rain doesn’t come on time then we will have issues continuing generation from those power plants,” Ranjith said speaking to EconomyNext on Thursday September 15.

“If that happens, we will again have to depend on fuel, which will be extremely expensive for us and that is a level we should not even imagine being in.” 

If the coal consignments do not arrive by end of October, the CEBEU warned that all units of the Lakvijaya, Norachcholai, Sri Lanka’s only coal power plant, will shut down. 

“It will take at least 35 days for a coal consignment to come,” said Ranjith.

“If the ministry is able to sign a contract with a supplier now, we should have coal by the end of next month.”

However, expressing concerns over new deals, Ranjith said, the government will face difficulties in purchasing coal if the new deal comes at a higher price than the offered deals.

 “We expect the ministry with its coal purchasing authority, the Lanka Coal company, will come up with something to acquire coal,” he said.

Public Utilities Commission of Sri Lanka (PUCS) Chairman Janaka Ratnayake said on September 11 that 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.”

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

Meanwhile, Brown Investments Plc, a subsidiary of Brown & Company Plc and the investment arm of LOLC Group, who has filed a case against the awarded company, said it expects to start negotiation with relevant authorities on a 4.5 million tonne coal deal partnered with a Chinese firm through an unsolicited proposal.

The Brown Investments-CMEC consortium in its original unsolicited proposal submitted August 12 quoted two price options: 554.27 and 526.18 dollars per metric tonne, much higher than UAE-based company’s price, another source who is aware of the prices told EconomyNext.

Later, the consortium through a second unsolicited proposal submitted, quoting 295 dollar per metric tonne of coal, a government source and an industry source said. 

Related – Sri Lanka’s Brown Inv expects to negotiate Chinese partnered 4.5 mln MT coal deal with govt

Related – Sri Lanka coal tender runs into controversy, warnings of extended power cuts

(Colombo/ Sep 15/2022)

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