A memorandum submitted to the Cabinet last week has recommended to direct the State-owned Lanka Coal Company (LCC) to take the necessary action to terminate the contract awarded to PT Arista Mitra Jaya after seeking legal advice from the Attorney General’s Department.

A new directive has been issued to award the contract to Coral Energy DMCC, the UAE and Combasst to Development Ltd., as an emergence procurement initiative to prevent amajor energy crisis due to shortage of coal

The Indonesian-based supplier Arista Mitra had failed to secure a letter of credit from an Indonesian bank, causing delays in supply.

Accordingly the Cabinet has recommended 720,000 MT to each supplier and to supply in 12 shipments as recommended by the Standing Cabinet Appointed Procurement Committee.

According to energy ministry sources Coral Energy DMCC has indicated that it would provide a performance bond worth $ 5 million, with eight shipments out of 12 to be supplied during this coal season.

The Combasst Industry Development is expected to provide $ 100,000 as a performance guarantee, with four shipments out of 12 to be supplied during this coal season subjected to the authentication of documents within the tendered timeline.

The Cabinet has recommended accepting the price of Coral Energy as $ 240 per MT (fixed) for quantities received before 5 May.

The Cabinet has also recommended negotiations with the contractor to come to a mutually-agreed index base price for the remaining quantities based on the negotiations letters of the bidders submitted on 5 February.

It has also recommended accepting the price of Combasst Industry at a price of $ 230 per MT based on the negotiation letters of the bidder submitted on 5 February.

The decision to permit the costly spot tender method has been approved by the Cabinet in case its third attempt to secure coal shipments under the tender floated last year fails, it is reealed.

The Technical Evaluation Committee (TEC) has recommended obtaining the remaining quantities from Coral Energy and Combasst Industry during the next season, which starts from September 2023.