- LCC firm on new stock arriving on time
Despite fears of a supply gap in power generation, the Lanka Coal Company (LCC) is anticipating the arrival of the first coal shipment of the upcoming second unloading season, scheduled for 10 September, it is learnt.
LCC Chairman Shehan Sumanasekara told The Sunday Morning that existing coal stocks were expected to last until 15 September.
He told The Sunday Morning that the shipment had already commenced its voyage from the loading point and would arrive in the country on 10 September.
However, sources within the Ceylon Electricity Board (CEB) told The Sunday Morning that existing stocks of coal would be sufficient only until 10 September, whereas the shipment was expected to reach Sri Lanka on 15 September, due to which there was likely to be a supply gap in power generation.
According to the source, the shortfall in stock is due to the shipments that were scheduled to be unloaded during the previous season not materialising.
Nevertheless, the LCC Chairman reiterated that the remaining stocks would be sufficient until 15 September.
When contacted, CEB Chairman Nalinda Illangakoon echoed the sentiments of the LCC Chairman, stating that sufficient coal stocks were available until the next shipment arrived.
Sri Lanka concluded the coal unloading season that began last October for the Lakvijaya Coal Power Plant (LVPP), the country’s only coal power plant in Norochcholai, unloading 30 coal shipments in May this year.
The CEB had previously noted a requirement of at least 30 shipments per season.
Currently, the LCC is operating in accordance with the instructions outlined in the Cabinet Memorandum No.09/2023/PE, signed by State Minister of Power and Energy D.V. Chanaka on behalf of the Minister of Power and Energy.
The Cabinet has recommended the procurement of 720,000 MT from each supplier in 12 shipments, with Coral Energy providing a $ 5 million performance bond for eight of the 12 shipments during the last coal season.
Combasst Industry Development (Pvt) Ltd. was to provide a $ 100,000 performance guarantee for four shipments for last season, subject to document authentication within a specific time frame.
In both cases, the remaining four (Coral Energy) and eight (Combasst Industry) shipments from both suppliers will be provided in the upcoming coal season of 2023/’24.
Additionally, the Cabinet has recommended accepting Coral Energy’s fixed price of $ 240 per MT for quantities received before 5 May 2023 and negotiating a mutually-agreed upon, index-based price for the remaining quantities, based on the negotiation letters submitted by the bidders on 5 February 2023 and other relevant documents.
The Cabinet has also recommended accepting Combasst Industry’s price of $ 230/MT (RCI-FOB Vostochny index base) based on negotiation letters submitted by the bidder on 5 February 2023 and relevant documents.
If any shipments remain available under this contract after completing the last season, the Technical Evaluation Committee (TEC) recommends obtaining the remaining quantities from Coral Energy and Combasst Industry during the next season starting this month.
However, it was Coral Energy that supplied shipments for the last season, totaling eight shipments, at a rate of approximately $ 240 per MT, while the world market price during that period was around $ 144 per MT.
As previously explained by the LCC Chairman, the remaining four shipments from the previous season would be unloaded for this season, subject to mutual agreement between Coral Energy and Combasst.
Both companies are required to agree on an index-based rate rather than fixed rates for the upcoming season.
The annual coal requirements for thermal power generation are collected from October to March of the following year, stored in the Coal Yard, and used for uninterrupted power generation.
From April to September, during the off-season with rough seas in the Norochcholai area, it is not possible to unload coal and the coal-carrying vessels cannot reach the power plant’s jetty.
The quantity of coal carried by ships arriving at Norochcholai is approximately 65,000 MT, and in line with the plant’s requirements, approximately 35 shipments are expected in a year.