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Sri Lanka FSRU tender stalls again

The Sri Lankan government has yet again pushed back the deadline for submitting bids to supply the country’s first liquefied natural gas floating storage and regasification unit

The Sri Lankan government has yet again pushed back the deadline for submitting bids to supply the country’s first liquefied natural gas floating storage and regasification unit.

The Ministry of Power, Energy & Business Development has now set a new date of 22 August for counter-proposals under the Swiss Challenge procedure for the FSRU, related pipeline infrastructure and to supply regasified volumes to the Ceylon Electricity Board.

This is at least the sixth time that the ministry has pushed back the bid submission deadline since the tender was launched in 2018.

Potential bidders have sought repeated clarifications from the ministry and this has resulted in several revisions and addenda to the initial tender documents.

Contractors had pointed out to the Sri Lanka authorities that their original financial history requirements effectively stopped the likes of Excelerate Energy, Golar LNG and Hoegh LNG from even bidding.

The international tender was launched as a Swiss Challenge — which requires a public authority to invite third parties to match or better an unsolicited bid — after South Korean contractor SK E&S submitted an unsolicited proposal to supply a converted FSRU.

The Sri Lankan government subsequently approached the market for a newbuild unit to be deployed about nine kilometres off Colombo.

Prospective players also questioned the ministry as to why they could not too propose an existing unit.

Clarification was also sought whether SK had performed a 1 million tonnes per annum regasification project in the past 15 years and had operated a 3 million tpa regas facility for more than one year – both requirements initially stipulated for rival bidders.

Commercial operations of the FSRU will commence 32 months latest after the execution of the gas sales agreement, according to the ministry.

Initial LNG demand of 600,000 tonnes per annum is envisaged, increasing to 1 million tpa.

Regasified volumes will be sent through two subsea pipelines as feedstock gas for power plants at Kelanitissa and Kerawalapitiya.

Under Swiss challenge guidelines, original proponent SK would be given the option to match the best rival bid.

If SK were to be unable or unwilling to match that submission, the contract winner would have to directly reimburse the South Korean company its $10 million development costs.

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