Browns Investments says hopeful of negotiating multi-billion coal supply deal with Govt.

Browns Investments PLC (BIL) on Tuesday expressed hope of negotiating the supply of coal to the Government in a multi-billion dollar deal.

In a late night filing to the Colombo Stock Exchange, BIL said together with China Machinery and Engineering Cooperation (CMEC), a company registered in People’s Republic of China as consortium partner, submitted an unsolicited proposal on 12 August in line with the decision of the Cabinet of Ministers to call for solicited, unsolicited and Government to Government proposals for the procurement of 4.5 million tons of Coal for Norochcholai Lakvijaya Coal Power Plant (LVPP) and award the same for the most favourable proposal.

BIL said it formally learnt of the failure to submit the performance bond on the part of the selected bidder, and consequential annulment of award made and forfeiture of bid Bond submitted. Therefore BI had reiterated, by way of a written communique dated 8 September addressed to the Minster of Power and Energy, that the consortium is able to ensure uninterrupted supply of coal as indicated in its letter in order to ensure the continuous supply of coal to the country.

In BIL-CMEC unsolicited proposal, the consortium offered terms to the Lanka Coal Company such as willingness to accept 50% of the contractual price in rupees coupled with the option of paying that 50% within a period of 5 years, in addition to being low in price of coal per Metric Ton, compared to failed selected awardee. 

By its 8 September letter, BI has reiterated its commitment to adhere to the same terms (offered in its unsolicited proposal dated 12-08-2022) even after the failure on the part of the selected awardee.

BIL said considering the terms offered in its proposal, the company “reasonably expects to enter into negotiations with the relevant authorities in order to secure the supply of the required volume of coal”. In its disclosure to the CSE, Bill also said it would be making further disclosures depending on the progress made on this matter.

Investors yesterday were not overly impressed by the announcement. BIL share price gained by only 20 cents or 2.6% to close at Rs. 7.90. Over 32 million BIL shares traded for Rs. 258 million.

The Cabinet Ministers, at its meeting on Monday, decided to seek the advice of the Attorney General to resolve the legal dispute concerning the $ 1.5 billion coal procurement, to avoid longer power outages from the latter part of October.

“The matter was discussed at length at the Cabinet meeting on Monday. It was decided to seek advice from the Attorney General and to make a submission to the Supreme Court highlighting the importance of a quick resolution to avoid adverse impact on the economy at large,” Acting Cabinet Spokesman and Minister Dr. Ramesh Pathirana said in response to a query at the post-Cabinet meeting media briefing.

In a related development, Ven. Dr. Omalpe Sobhitha Thero last week filed a Fundamental Rights petition in the Supreme Court seeking an order staying the purported award made to a company incorporated in the United Arab Emirates (UAE) for the procurement of 4.5 million tons of coal to the Lakvijaya Power Plant.  

The petitioner is challenging the decision of the Special Standing Cabinet Appointed Procurement Committee to award the coal tender to the Black Sand Commodities Company and subsequent approval issued by the Cabinet Ministers.  

Sobhitha Thero maintained that the price per ton of coal for which the tender has been awarded to the Black Sand Commodities Company, is exorbitantly high, vis-à-vis the current Russian prices, thus, giving an unjustifiably and indeed unconscionable profit margin to the above company. 

The Petitioner also said that Black Sand Commodities Company is not registered with Lanka Coal Company Ltd. as a supplier of coal.   

Separately in response, Power and Energy Minister Kanchana Wijesekera also officially requested Committee of Public Finance (COPF) Chairman and MP Dr. Harsha de Silva to conduct an inquiry on the procurement of coal. 

“False allegations levelled against the awarded tender have created questions on transparency and pricing. I hope COPF will expedite the inquiry,” Wijesekera said via Twitter.

Last week, Public Utilities Commission of Sri Lanka Chairman Janaka Ratnayake warned that Sri Lanka might lose 900 MW of coal power generation due to the unavailability of sufficient stocks and the ramifications of it will have to be borne by the public with long power outages.