Every major government tender must ensure that bidders demonstrate sufficient financial capacity to absorb potential…

Every major government tender must ensure that bidders demonstrate sufficient financial capacity to absorb potential penalties and meet the capital demands of the goods or services they provide.

⭕️ When these requirements are not properly defined or enforced, the responsibility rests with the government and the officials overseeing the process. If there is concern that a company may face bankruptcy when penalties are imposed, such a company should not be considered eligible for the tender.!

⭕️ In the October 2022 Coal term tender invitation, the qualification notice required bidders to have supplied a minimum of 1 million MT of coal within the last three consecutive years, with a Gross Calorific Value above 5900 kcal.

⭕️ In the 2025 Coal Supplier Registration document, the requirement is lower. It states that the applicant must have experience supplying more than 500,000 MT of coal within the last 36 months, with only a minimum of 100,000 MT needing a GCV of 5900 kcal/kg or above.

⭕️ This easing of conditions may have affected the ability of more qualified entities to secure the tender.

⭕️ Adequate penalties are also critical to ensure compliance and discourage violations. If the cost of non-compliance is lower than the benefit gained, entities will rationally choose to take that risk.

⭕️ For example, if the penalty for travelling illegally on a bus is lower than the ticket price, many will choose to evade payment, knowing they can simply pay the fine if caught. The same principle applies to large-scale contracts. Penalties must be strong enough to act as a real deterrent and ensure that contractual obligations are taken seriously.

⭕️ One of the more concerning issues with this government is that, due to extreme pressure on committees and the high risk of litigation, tender decisions have become overly constrained. Under such pressure, no technical or tender committee will approve a higher bid, even if that company is more experienced and better positioned to consistently deliver a higher-quality product.

⭕️ Issues like this need to be addressed. Committees should be given more flexibility to select a higher-quality supplier where the price difference is within a reasonable range.

⭕️ The notion that simply following a tender process will always deliver the best outcome for the government is a misconception. However, it remains the best system available. That said, the government must review not only the coal tender process but the entire public procurement system, addressing unnecessary delays and structural shortcomings, as these weaknesses will continue to amplify such issues going forward.

#SriLanka #CoalTender