• Offers LCC ‘reasonable payment options’
• Black Sand Commodities registered and green lit by AG

Russia mineral export giant Black Sand Commodity has won this year’s long-term coal tender to supply coal to Lakvijaya, Sri Lanka’s only coal power plant in Norochcholai.

Black Sand Commodities, based out of the UAE, was established in June 2022 as an exclusive exporting company of Joint-Stock Company Siberian Coal Energy Company (JSC SUEK), the largest Russian coal producer, the company website states.

Black Sand is expected to supply a total of 2.25 million metric tonnes (MT) of coal through 38 shipments at an index-based rate of $ 124 per MT. 

Russia’s Black Sand is the second lowest bidder, following the controversial supplier Coral Energy DMCC, another UAE-based energy firm, which submitted bids for the long-term contract at a rate of nearly $ 123 per MT.

It is reliably learnt that the tender had been initially awarded to Coral Energy, but the company had subsequently cancelled its bid. 

Coral Energy had informed that it could not provide coal at the price it had initially suggested, citing issues related to the region in which it is based.

Nevertheless, it is also learnt that Black Sand had submitted the second lowest bid and, therefore, had been selected to be awarded the tender. 

When contacted about the long-term tender, Lanka Coal Company (LCC) Chairman Shehan Sumanasekara told The Sunday Morning that the long-term tender to supply coal to the Norochcholai coal power plant had been awarded to Black Sand Commodities FZ-LLC, as the company had submitted a low rate for coal.

“The company will be supplying 38 shipments. Currently, we have received six shipments from Coral Energy that were pending from last season and three more shipments are expected from them. Once that is done, Black Sand will commence supplies. For this season, it will supply 31 shipments, making a total of 40 shipments for the season. The remaining seven shipments will be postponed to the next season,” Sumanasekara explained.

He went on to say that the company had not only offered the lowest rate, but also a very reasonable payment option. 

“We won’t be paying until the shipments arrive at Sri Lankan ports. There will be no payments made at the loading point. Payments will commence during unloading in Puttalam. A total of 80% of the payment will be made before unloading and the remaining 20% will be made once the quality assurance certificate is received,” he noted.

Nevertheless, last year, Russia’s SUEK AG/Black Sand Commodity came under the spotlight following the awarding of a $ 1.4 billion contract with approval from the Cabinet. 

The company had offered the lowest bid at $ 328.22 per MT, including freight charges, to supply nearly 4.5 million MT of coal to Lakvijaya for three years on a six-month credit period. 

However, the tender was subsequently cancelled by Power and Energy Minister Kanchana Wijesekera as Black Sand Commodities had communicated its inability to perform the tender, citing concerns about legal cases filed and payment guarantee risk.

The tender had been awarded on 25 August 2022 after assessing three unsolicited proposals based on the lowest price. 

However, a petition filed by Ven. Omalpe Sobitha Thera stated that the coal tender had been awarded to a party that was not a qualified bidder. The petition also claimed that the tender had compelled the country to purchase coal for a long period of two-and-a-half years at a price determined by the prevalent coal price, which was at an extremely high level due to the Ukraine war. 

Several unsolicited proposals should have been evaluated, according to the petition.

Nevertheless, after the petition was filed in the Supreme Court, the supplier refused to proceed with the contract until legal clearance was given.

Commenting on the matter, the LCC Chairman confirmed that Black Sand was now a registered company with the LCC and there were no legal barriers. “I have sought and received concurrence from the Attorney General’s Department,” Sumanasekara said.

Lakvijaya provides nearly 900 MW of energy to the national grid, accounting for about 40% of the country’s total energy requirement.