Sri Lanka has secured only 12 coal shipments out of the total 30 shipments scheduled for the October 2022-April 2023 unloading season, the Lanka Coal Company (LCC) said on Friday (10).
In addition, the LCC has made 30% part payment up to the 17th shipment for the season. It is learnt that the 13th shipment has already berthed in Puttalam while the 14th shipment was nearing Sri Lankan waters as of last Friday.
However, the 70% payments for both shipments are yet to be made by the Ceylon Electricity Board (CEB) due to the unavailability of funds.
LCC Chairman Shehan Sumanasekara told The Sunday Morning that the company had made 30% part payments up to the 17th shipment, but the remaining 70% of the payment for each shipment should be made once they arrived in the country.
According to him, the bulk of 70% of payments – close upon Rs. 15 billion – is pending for five shipments.
As of Friday (10), a final decision regarding the payment for the shipment that arrived in Puttalam had not been reached by the Government, The Sunday Morning learns.
Responding to a question, LCC Chairman Sumanasekara said he was confident the deadline would be met and the payments made before incurring losses for demurrage.
When asked whether they would have to pay demurrage, Sumanasekara said that payments would hopefully be settled by next week and there would be no costs being accumulated as a demurrage as a result of any delay.
He also said that there would be sufficient time to unload all 30 shipments required for the season before the sea conditions changed by end April, noting that the supplies on credit under the newly-awarded tender would also be expected from March.
“We had issues with the previously selected Indonesian supplier and we have sought the Attorney General’s (AG) opinion over the issues. Once we get the concurrence from the AG, the relevant action will be taken,” he said.
The Indonesian contract was the second of such nature awarded to an international supplier following the cancellation of the previously finalised contract worth $ 1.4 billion, which was awarded with the approval of the Cabinet to Russia’s Suek AG/Black Sand Commodity.
It offered $ 328.22 per MT (including freight charges), the lowest bid to supply nearly 4.5 million MT of coal to Lakvijaya for three years on a six-month credit period, but the contract was cancelled by the Government a few months ago.
Meanwhile, The Sunday Morning reliably learns that steps are being taken to finalise the tender with the next suitable suppliers as per the Cabinet decision and one such supplier that has already been finalised is the controversial Coral Energy company based in the UAE.
However, sources said that two companies, including Coral Energy, had agreed to provide coal on credit and were expected to commence supplying coal from March this year.
At present, a majority of 45.4% of the total energy requirement of the country is fulfilled by the Lakvijaya Power Plant with 26.8% of energy from hydropower.
Depending on the specifications of the coal for which the boiler is designed and environment concerns, low-sulphur and low-ash coal is imported for the Lakvijaya Power Plant mainly from South Africa, Indonesia, and Russia.
The annual consumption of coal by Lakvijaya is 2.2 million MT.