Twist and turns in Sri Lanka’s coal tender
Sri Lanka’s tender procedure for the procurement of coal to operate the Norochcholai power plant has taken a dubious turn with the cancellation of bids for the second time in eight months. The previous tender was cancelled in December 2013
The decision to cancel the bids called through a newspaper advertisement on 17-04-2014 for the purchase of coal by Lanka Coal Company was taken by the cabinet of ministers, two weeks before the commissioning of the 3rd and final phase of Norochcholai Lak Vijaya coal power plant by Chinese President Xi Jinping with much fanfare. A directive has been issued to call for fresh international competitive bids, following the Government Procurement Procedure as indicated in the observations of the Ministers of Finance and Planning and Technology and Research.
The Minister of Power and Energy Pavithra Wanniarachchi has been requested to submit her views to the cabinet on the observations made by the Minister of Technology and Research Patali Champika Ranawaka, official sources said.
Prompt action would have to be taken to import coal as soon as possible to prevent a shutdown of the plant due to shortage of coal, Ministry of Power and Energy sources said, adding that the Ceylon Electricity Board (CEB) will have to purchase power at higher rates from diesel power plants in order to maintain an undisrupted power supply to the people.
A stock of 7800 metric tons of coal is needed daily to operate all three phases of the Norochcholai power plant with the current stock sufficient for just another month, a senior official said adding that the CEB will incur heavy losses if it continues the practice of shutting down the power plant to conserve coal stocks.
According to official sources six companies have made bids in the tender to supply 2.25 million metric tons of coal per year. Five of them were disqualified at the evaluation test except Swiss Singapore Overseas Enterprises. Noble Resources International Pvt. Ltd, the current supplier of coal from Indonesia, was also disqualified. The successful bidder had been Swiss Singapore Overseas Enterprises which supplies coal from South Africa.
He revealed that there was an allegation that the Technical Evaluation Committee and the Cabinet approved procurement committee had disqualified five bidders on the directive of some officials, allegedly to share a massive commission of $13.5 million a year at the rate of $6 per metric ton. Under these circumstances the cabinet had cancelled the deal and called for fresh bids but until such time, the government has no alternative other than reverting back to the current supplier Noble Resources to procure coal to meet urgent requirements, he added.