Tuesday, June 25, 2024

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LCC goes from pillar to post to find Rs15.3 billion to buy coal

Off the back of delaying payments for 12 coal shipments to run Norochcholai coal power plant with full capacity of 900 megawatts before the monsoon ( April 20), Lanka Coal Company Chairman of the Lanka Coal Company is going from pillar to post to find Rs15.3 billion required immediately to buy coal for the upcoming week.

Chairman of Lanka Coal Company Shehan Sumanasekera, has raised concerns about the continuation of operations at the Norochcholai power plant if the required funds for coal purchase are not obtained.

He has proposed that the Central Bank of Sri Lanka (CBSL) provide the required amount in dollars as payments for such shipments are usually done in two installments 30 percent at the time of the shipment, and 70percent when the coal is being unloaded.

He noted that two of these payments have already been delayed wing to a lack of funds.and it has to make these payments for three coal shipments from 30 January to 03 February.

The company has paid the first installment of 30 percent of Rs. 1.35 billion for one shipment, however the initial installments for the other two ships are yet to be paid, and these were due on Thursday and Friday of last week”, the Chairman said.

He further noted that a more grave situation is likely to arise in the upcoming week, as the initial payments of 30 percent to two of the three shipments, and the remaining 70 percent due for all three ships will be added to the cost of Rs. 10.74 billion required for coal procurements scheduled for the period between today (04 Feb.) and 10 February.

Previously Sumanasekera requested Minister of Power and Energy Kanchana Wijesekera for US$ 12.32 million, amounting to Rs. 4.56 billion, to pay for the three shipments of coal for which payments are overdue.

For a season Lanka Coal Company (LCC) requires 2 million mt of coal – 33 ship loads to manage the current season and also to store the buffer stock for the Monsoon season.

The LCC is bringing 21 ship loads of coal under already given contracts to two supplier companies early last year, official sources said.

The procurement committee has called for Expressions of Interest (EOI) from prospective suppliers and government to government proposals, on a long-term credit basis to bring these 12 shipments and the EOI was called by LCC for this purpose last year.

For the first time in history, for a contract of over US$ 300 million, an EOI was called from suppliers without asking to submit a bid bond. Further they were not asked to give a performance bond too.

This was a conspiracy to bring unknown paper companies to the bidding process and to drag the supply. (Specially these 12 shipments which were to be supplied coal on credit basis) sources said. .

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