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SL just averts a major energy crisis awarding the coal tender to two firms

By: Staff Writer

Colombo (LNW): Sri Lanka has just managed to avert a major energy crisis triggered by coal shortage after awarding the import contract to two companies previously short-listed in a cabinet decision arrived at recently.

The tender called select prospective bidders to  bring 12 coal shipments to run the Norochcholai coal power plant with full capacity of 900 megawatts has now been awarded in accordance with cabinet decision  before April 20 and manage the monsoon season (April to September), Energy Ministry sources said.

For a season Lanka Coal Company (LCC) needs 2 million metric tons of coal – 33 ship loads to manage the current season and also for the monsoon season.

The LCC is bringing 21 ship loads of coal under already given contracts to two supplier companies last year, official documents revealed. However, and the 12 balance shipments should arrive before the monsoon season starts.

The cabinet has recommended to direct the State-owned Lanka Coal Company (LCC) to take necessary action to terminate the contract awarded to PT Arista Mitra Jaya after seeking legal advice from the Attorney General’s Department and to award the contract to Coral Energy DMCC, the UAE and Combasst Industry Development Ltd., as an emefency procurement initiative  

According to energy ministry sources , Coral Energy DMCC has indicated that it would provide a performance bond worth US$ 5 million, with eight shipments out of 12 to be supplied during this coal season.

Combasst Industry Development has agreed  to provide $ 100,000 as a performance guarantee, with four shipments out of 12 to be supplied during this coal season subjected to the authentication of documents within the tendered timeline.

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, 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 ministry revealed.

The 12 shipments must arrive at the Colombo Port before April 20 somehow to avoid the long hour power cuts.

According to the Cabinet decision it has recommended accepting the price of Coral Energy as $ 240 per MT (fixed) for quantities received before 5 May.

The Cabinet has also recommended negotiations with the contractor to arrive at a mutually-agreed index base price for the remaining quantities based on the negotiations letters of the bidders submitted on 5 February.

It has also recommended accepting the price of Combasst Industry at a price of $ 230 per MT based on the negotiation letters of the bidder submitted on 5 February.

Further, it is understood that if remaining shipments of this contract are available after the completion of the ongoing unloading season (April), the Technical Evaluation Committee (TEC) has recommended obtaining the remaining quantities from Coral Energy and Combasst Industry during the next season, which starts from September 2023.

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