• Payments due for 3 shipments, no positive response from banks so far
• Lanka Coal Co. notes urgency of payment due to unloading delays, late fees, demurrages  

The Ceylon Electricity Board is facing an uphill battle to obtain funds to make urgent payments for three coal shipments due this week and is presently exploring the options of obtaining a loan from banks, the response for which has been unfavourable thus far, while also pursuing the possibility of utilising monies from customer bill payments received by them this week.     

The CEB is attempting to obtain the loan to provide the funds necessary for the Lanka Coal Company to make payments for three coal shipments which are urgently needed in order to prevent a lengthening of the current power cut duration.

Speaking to The Daily Morning yesterday (6), CEB Chairman N.S. Ilangakoon confirmed that a bank loan is one avenue that is being explored in order to secure the necessary funds. “We are looking for a loan and have discussed the same with the Presidential Secretariat, the Treasury and the Ministry of Power and Energy. We need funds for the coal shipments and we need a loan but due to the lack of cash inflows due to the delay in the electricity tariff increase, none of the banks have agreed to provide us with that. We have written to the Treasury and the Presidential Secretariat on a daily basis.”

This follows requests from the Lanka Coal Company for urgent funds for the procurement of coal for this week.

When inquired as to an alternative course of action if such a bank loan is not forthcoming, Ilangakoon stated that one other option was obtaining the necessary funds though consumer bill payments: “There are some collections today (6) and tomorrow (7), which is one option. We are trying our best to see if we can get the money from somewhere.”

However, he did not confirm whether a failure to secure the funds this week would lead to a lengthening of power cuts. “We are optimistic about settling the payment; but, if it (the payment) doesn’t happen as expected, we will have to discuss with the Board of Directors as to what we could do.”

Speaking to The Daily Morning earlier yesterday, Lanka Coal Company Chairman Shehan Sumanasekara said that funds are required urgently in order to avoid a delay in the entire process of unloading as well as late payment fees and demurrages. “This is a complex process because we had different payment mechanisms and different terms agreed upon with the suppliers. There were two payments that were supposed to go on 2 and 3 February. One unloading vessel payment we are supposed to do today (6). We normally pay these one day before the vessel arrives so that there are no last minute issues. Hence, we requested the payment last week but couldn’t get it; so now, the vessel will be arriving. We still have a period of 12 hours before it gets into demurrages or late payment fees. I believe that from the conversations we had (with the CEB), they (CEB) are trying their best to make the payment tomorrow (7). If that happens, we might not have a huge problem considering the time frame; but, if by chance the payment cannot be done tomorrow, we might get into late payment fees, etc., on the vessel which is scheduled to arrive.”

Speaking at a media briefing held on 4 February, Sumanasekara raised concerns about the continuation of operations at the Lakvijaya Power Plant in Norochcholai if the required funds for coal purchases are not obtained. He stated that Rs. 15.3 billion is required immediately for the procurement of coal for this week, proposing that the Central Bank of Sri Lanka provide the required amount in United States dollars (US $).

Explaining the seriousness of the coal crisis, Sumanasekara said that while payments for such shipments are usually made in two instalments – 30% at the time of the shipment, and 70% when the coal is being unloaded – two of these payments have already been delayed owing to a lack of funds. “We have to make these payments for three coal shipments from 30 January to 3 February. We have paid the first instalment of 30% of Rs. 1.35 billion for one shipment; however, the initial instalments for the other two ships are yet to be paid, and these were due on 2 and 3 February,” Sumanasekara said. He further noted that a more complicated situation is likely to arise this week, as the initial payments of 30% to two of the three shipments, and the remaining 70% due for all three ships will be added to the cost of Rs. 10.74 billion required for coal procurements scheduled for the period between 4 and 10 February. Thus, Sumanasekara urged that an immediate solution be found for this crisis, before the Power Plant runs out of coal.