Chinese company gets multibillion contract to expand coal yard

China Machinery Engineering Corporation ( CMEC), builder of the Lakvijaya coal power plant, has won a contract worth more than Rs 4.6 billion to expand its coal yard.

The award further increases the footprint of Chinese companies handling multibillion rupee projects in Sri Lanka. CMEC already has a repertoire of businesses here, including the 400 megawatt natural gas power plant coming up in Hambantota and the Rs 35.8 billion Basnagoda-Attanagalu Oya water supply project.

Only two bidders participated in the coal yard tender advertised in August 2017, according to a cabinet memoran- dum submitted by Power and Energy Minister Ravi Karunanayake. They were Shanxi Xintang Engineering Design Inc and CMEC.

Shanxi Xintang’s bid was rejected by a technical evaluation committee (TEC) on six grounds, including the average annual construction turnover being in the Chinese language and the authorisation for bid signing not containing a signature. Therefore, only the CMEC's financial proposal was opened.

The cabinet paper argues that the Lakvijaya power plant's design capacity only allows for storage of 742,421 tons or three months’ worth of coal for the three units, each of which generates 300MW. Coal unloading was not possible for six months of the year during the Southwest monsoon from April to the middle of September owing to rough seas. Therefore, the coal yard required expansion to accommodate 1.21 million tons.

The project covers ground works, installation of a stacker reclaimer (coal handling machine that is the single most expensive component of the project), construction of two transfer towers, two new coal conveyors and extensions to existing ones.

There is general acceptance that the coal yard needs expansion. Industry sources pointed out, however, that coal quantities procured by Lakvijaya in the past have sufficed--even with interruptions for monsoons--to run all the units throughout the year without shutdowns on account of there being not enough coal.

Meanwhile, the existing coal yard infrastructure will have to tide over till the expansion project is completed, which could be in around three years. It is also not known why the requirement for a bigger coal yard was not anticipated in the design phase, when the second and third units of Lakvijaya were conceptualised.

CMEC is also behind the Greater Kurunegala Water Supply and Sewage Project and the Jaffna Kilinochchi Water Supply and Sanitation Project.

It has also won contracts running into millions of dollars for maintenance of turbine and related accessories in two out of three of Lakvijaya units.

The last one was awarded in February this year.