News
LCC tightens rules, floats tender for 2.28mn MT of coal for 2026–27 season
View(s):By Namini Wijedasa
Lanka Coal Company (Pvt) Ltd (LCC) this week floated a tender for 2.28 million metric tonnes (MT) for the 2026-27 season, changing several of the bid conditions with the objective of avoiding a procurement similar to the ongoing fiasco of substandard coal.
While some of the terms have been tightened, the tender this time is open to “eligible and qualified coal suppliers”, rather than the usual “registered” coal suppliers. The closing date for bids is May 14, 2026. The bid security is US$2.28 million or Rs 700 million.
The quantity of coal tendered amounts to 38 vessels, with delivery to take place over 210 days.
To qualify, a bidder should have supplied more than 2 million MT of coal in the past 36 months, including a minimum of 1 million MT with gross calorific value (GCV) of 5,900 kcal/kg or above. This condition is an amendment. In the last tender, companies with experience of supplying more than 500,000 MT of any coal type in the last 36 months were eligible, and just 100,000 MT of coal above 5,900 GCV.
GCV is the total energy released when coal burns completely, including latent heat from water vapour condensation.
To make the tender conditions stricter, LCC studied the procurement guidelines of the World Bank, the Asian Development Bank, the Sri Lanka Institute of Development Administration and others.
The new tender guidelines also say that the bidder shall demonstrate an annual average turnover of not less than US$100 million over the last three audited financial years, with a cumulative turnover of not less than US$300 million over the same period. This was earlier an annual average turnover of US$50 million or equivalent over the last three financial, not audited, years.
Bidders shall demonstrate access to working capital, liquid assets or credit facilities of not less than US$30 million, sufficient to meet the financial requirements for performance of the contract. This was previously US$15 million
Crucially, testing of coal samples shall now be done—both at the load port and the discharge port (Norochcholai)—exclusively by an accredited and internationally recognised independent surveyor appointed by the buyer, LCC. Earlier, the seller was responsible for selecting a laboratory for testing load port samples.
The clauses related to termination say in the event that “in respect of any two different shipments”, any coal quality parameter is reported outside the minimum or maximum tolerance limits specified in the schedules—as evidenced by testing of coal samples at the load port and discharge port in accordance with the sampling and testing procedures set out in the agreement—”LCC shall be entitled to terminate this Agreement with immediate effect, without any cure period.”
Further, LCC reserves the right to terminate the agreement if, in three shipments within any continuous six-month period, the GCV reported in either the load port test results or the discharge port test results for the relevant shipment deviates more than ten per cent from the specified standard value and such deviation is confirmed through testing of the relevant reference samples by an independent accredited laboratory.
It earlier said, “In the event any two different shipments of coal quality parameters are reported outside the absolute minimum/maximum tolerance limit after testing of coal samples at the load port and jetty of the plant…then LCC may terminate the contract agreement. Further, LCC reserves the right to terminate the contract if there are any significant deviations of quality parameters reported frequently between the jetty of the plant and load port test reports and after verified [sic] by testing of the relevant reference samples.”
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