Controversial coal tender cancelled

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The controversial coal tender, awarded on 25 August, was cancelled by the Cabinet on Thursday (22), as the selected supplier has communicated their inability to perform the tender, citing concerns on the impact on legal cases filed and payment guarantee risk, Minister of Power and Energy Kanchana Wijesekara said.

This is in the backdrop of the Ceylon Electricity Board Engineers’ Union warning that daily power cuts are likely to be extended to 10 hours a day, if coal is not received by 25 October.

The Minister tweeted, Lanka Coal Company will publish a new International Open Competitive Tender that will allow any suitable supplier that can provide Coal on a long-term credit basis.

“To fulfil the immediate requirements, the balance of 19 Cargos from last year’s tender will be advanced,” Wijesekara said.

The Ministry of Power and Energy earlier requested assistance from the Attorney General in providing legal clearance for the coal tender of the Lakvijaya Power Plant, in a backdrop where operations at the Kelanitissa and Lakvijaya power plants were running the risk of coming to a complete standstill by November 2022.

The supplier has decided to suspend contract performance due to the filing of a Fundamental Rights Petition by Ven. Omalpe Sobitha Thera.

Ven. Thera filed the petition requesting the Apex Court to issue a verdict that the fundamental human rights of the people have been violated by offering the tender for the purchase of coal for the Lakvijaya Power Plant to the Black Sand Commodities Company located in the State of Dubai.

Therefore, Minister Wijesekara asked the Cabinet to allow the Attorney General to assist with the case and if that is not possible, to give Cabinet permission to call a Spot Tender for coal shipments. With coal supply uncertain, operations at the Kelanitissa and Lakvijaya Power Plants risk coming to a halt by November 2022, according to the Ministry of Power and Energy.

The said tender sparked controversy when allegations were levelled that irregularities has occurred around the tender process. Also, questions were raised about the prices of the tender claiming that it was too high.

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. This is the largest tender awarded for coal in Sri Lanka to date.  It was supposed to supply coal at a base rate of USD 295.22 and USD 33 a tonne for freight.

The deal was supposed to be for seasons 2022-2023, 2023-2024 and 2024-2025. However the firm had agreed to give six months credit.

Meanwhile, Chairman of Public Utilities Commission of Sri Lanka (PUCSL) Janaka Rathnayake recently said that the current coal stocks are only enough until 25 October.

Thirty per cent of the country’s electricity supply depends on the Lakvijaya power plant despite one generator being out of order. More than 40 per cent of the electricity demand is met from Lakvijaya when all three generators are in operation.

BY Methmalie Dissanayake