SK E&S Company to build LNG import terminal in Sri Lanka?

SK E&S Company to build LNG import terminal in Sri Lanka?Illustration purposes only (Image courtesy of Excelerate Energy)

Sri Lankan government has reportedly received a free-of-charge bid for construction of a floating liquefied natural gas (LNG) import terminal by a South Korean SK E&S Company. 

According to a report by the Sri Lankan newspaper The Sunday Times, the government will open the proposal for procurement under the Swiss Challenge method.

The bid is also tied to an order for 1 million tons of liquefied natural gas per year for over 20 years. The sale and purchase agreement under the proposal would have a start date in the second half of 2020 and an end date in March 2040.

The floating storage and regasification unit (FSRU) would be provided free-of-charge, while the government would have to fund the pipeline.

However, industry experts have not welcomed the action taken by the government commenting that the Swiss Challenge in most cases favors the original proponent, limiting the options for a competitive bidding procedure to take place.

Instead, the industry experts propose compiling a number of unsolicited proposals, similar to the South Korean one, and then to follow this up with a request for proposals (RFP) in order to handle the interest in the country’s natural gas market.

The bid from SK E&S Company was submitted last month and has now been put forward under the Swiss concept for approval by the Ceylon Electricity Board (CEB). The board has approved the call for tenders for the purchase of LNG for imports of liquefied natural gas needed to feed the gas-fired power plants under construction.

The government also sought board approval for unsolicited proposals by Japanese and Indian companies, as well as a joint venture proposal by Sri Lanka, Japanese and Indian companies under the same Swiss Challenge concept.

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