Sri Lanka to call for fresh international coal tender amid further power cut threats 

ECONOMYNEXT – Sri Lanka’s state-run Lanka Coal Company will call for a fresh international tender to purchase coal after the cabinet canceled the tender awarded to United Arab Emirates-based Black Sand Commodities FZ-LLC following a legal case filed over awarding the tender.

Power and Energy Minister Kanchana Wijesekera said the coal tender that was awarded on August 25 was canceled by the Cabinet on Thursday on the request of the ministry as the selected supplier Black Sand Commodities FZ-LLC has communicated the inability to perform the tender sighting concerns on the impact on legal cases filed and payment guarantee risk.

“Lanka Coal Company will publish a new International Open Competitive Tender that will allow any suitable supplier that has the ability to provide Coal on a long term credit basis,” Wijesekera said in a Twitter feed.

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

The tender was awarded after assessing three unsolicited proposals on the basis of lowest price. However, after Black Sand Commodities FZ-LLC was awarded at $328 per tonne of coal, a consortium of Brown Investment and China Machinery & Engineering Cooperation (CMEC) came up with another bid and said it could supply coal from $285-$290 per tonne.

Influential Buddhist monk Omalpe Sobitha Thera has filed a Fundamental Rights petition in the Supreme Court seeking an order staying the purported award made to a company incorporated in the UAE for the procurement of 4.5 million MTs of coal for the Lakvijaya Power Plant, challenging the decision of the Special Standing Cabinet Appointed Procurement Committee to award the coal tender to the Black Sand Commodities Company and subsequent approval issued by the Cabinet of Ministers.

The next hearing is fixed for October 21 and the UAE company delayed the mandatory performance bond payment citing the legal case.

The tender cancellation has also raised concerns over the availability of coal for power generation at a time the island nation has seen some reduction in the power cut duration and the state-owned power regulator has warned of a more than 10 hour blackout if the continuous coal supply stopped.

“There is a risk of the power cut being extended to 10-12 hours because we generate 30-35% of the electricity from coal,” Janaka Ratnayake, the chairman of power regulator Public Utility Commission of Sri Lanka (PUCSL) , told the media this week. (Colombo/Sept23/2022)

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