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Mixed system to buy coal
View(s):The Lanka Coal Company will float a fourth spot tender for coal next month, a senior official said. Coal purchased through spot tenders will supplement a one-year term contract which has been awarded to a company called Swiss Singapore Overseas Enterprise (Pte) Ltd, Ministry of Power and Renewable Energy Ministry Secretary B.M.S Batagoda said. He said this mixed system would hereafter be followed to maximise competition and increase participation by a wide variety of players in the coal industry. The company that won all three spot tenders was JV of Liberty Commodities Ltd.
So far, three spot purchases of coal have been made in the past two months. One cost US$ 55.70 a metric tonne of coal, the second was US$ 51.29 while the price came down to US$ 49.85 in the third instance. The term contract, however, was awarded to Swiss Singapore for US$ 58 a ton. Critics said this caused immense losses to the country as the price was more expensive than any of the spot tender rates. However, Dr Batagoda said it was a base price and that it would be adjusted via a formula each time a shipment was loaded. It has also been decided that long-term contracts will only be awarded for one year (not three, as earlier practised) with delivery within two years. Thus, Swiss Singapore must provide 2.4 million tons at the rate of 1.2 million tons a year. This will be backed up with spot tender purchases every few months to ensure continuity of supply.
Meanwhile, coal suppliers are now being selected via a live registration system and not via a periodic evaluation process followed during earlier tender processes.