Home » Govt prevents loss of US$ 450 Mn from controversial coal tender

Govt prevents loss of US$ 450 Mn from controversial coal tender

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The Committee on Public Enterprises (COPE) says that the government would have incurred a loss of USD 450 million had the coal tender which recently sparked controversy been awarded to the company Black Sand Commodities.

Following a report by Sri Lanka’s auditor general’s department, the parliamentary Committee on Public Finance (COPF) has recommended that action be taken against officials who oversaw a 2022-2025 coal tender for the Norochcholai coal power plant.

Minister of Power and Energy Kanchana Wijesekara shot back in parliament on asking the committee to hear out the officials’ version of events before making recommendations

Citing a report by the Auditor General, SJB MP Patali Champika Ranawaka said the company was looking to purchase a ton of coal priced at USD 284.84 based on the composite index.

He added that  when in contrast, the same quantity could have been purchased at USD 179.55, according to the Russian index.

“In other words, the cost of every ton is USD 100 for a quantity of 4.5 million tons of coal. If this happened, there would have been a problem amounting to USD 450 million,” he revealed.

Quoting the report further, MP Ranawaka said the although there was an opportunity to discuss the bidding prices, the Auditor General has observed that no attempt has been made to do so.

A company which was awarded a contract to supply coal on credit has refused go ahead until legal clearance is given, the Power & Energy Minister said Power Minister Kanchana Wijesekera after the deal ran into controversy and some activists went to court.

The supplier “had decided to suspend performing the contract awarded to them until legal clearances were given,” the Energy Ministry said.

“Met with the officials of the Lanka Coal Company yesterday and the contract awarded suppliers to discuss the issues related to the Coal Procurement for the Lakwijaya Power Station,” Minister Wijesekera added. 

According to information now in the public domain, a company called Black Sands Commodities FZ LLC based in the UAE was given the deal to supply 4.5 million tonnes of coal from Vanino Port, Russia.

It was supposed to supply coal at a base rate of 295.22 US dollars and 33 dollars a tonne for freight.

The deal was supposed to be for seasons 2022-2023, 2023-2024 and 2024-2025. Critics have said the price was too high.

However the firm had agreed to give six months credit. Sri Lanka has a tendency to buy fuel on credit when the central bank prints money to create forex shortages.

Minister Wijesekera defended the deal in parliament saying the supplier was the lowest responsive tender.

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