Chinese firm to supply coal to Sual plant

State-owned National Power Corp. (Napocor) is expected to award next month to the Shanxi Import/Export Group Co. of China the contract to supply 325,000 metric tons (MT) of coal to the Sual coal-fired power plant in Batangas.

Last Friday, Shanxi submitted the lowest tender during the electronic bidding, edging out two other Chinese suppliers – Shenua Coal Trading Co. and China National Coal Import/Export Group Co.

Based on official bidding results released by the Napocor’s Bids and Contracts Services Department, Shanxi’s bid was $26.44 per metric ton (MT) freight on board (FOB) and $5/MT for freight costs, for a levelized cost of $31.4448/MT.

Shenua placed second with a bid of $25.05/MT plus $6/MT for freight costs, for a levelized cost of $31.5091/MT. At a distant third was China National, whose tender was placed at a levelized cost of $32.5529, consisting of $27/MT and $5.10 MT for freight costs.

Shanxi’s bid is now undergoing post-evaluation by Napocor’s Contracts Awards Committee, and will be subject to the approval of the Napocor board. The nine-man board is expected to hold its next regular meeting on July 30.

Under the electronic process, Napocor allows qualified bidders to submit their tenders on-line and then ranks these bids using the "reverse auction" method.

Specifically, all technically-complying bidders are given individual computer terminals inside the Napocor e-bidding room where they can key in their price bids, and at the same time monitor the lowest levelized bid without knowing which of the other bidders submitted this.

One of the advantages of e-bidding is that it gives a bidder the flexibility to revise his price bid on-line for as many times as he wants during the prescribed bidding period (in the case of the Sual coal supply, the bidding process took over 2 1Ú2 hours). When the bidding period is completed, Napocor then announces the lowest levelized bid and reveals the identity of the winning bidder.

Napocor employed the e-bidding system beginning 2001 to streamline its bidding process and at the same time give it greater transparency. The method has also enabled it to receive more competitive offers for the contracts that it regularly bids out.

Before it started using the e-bidding process, Napocor employed the two-envelope system, where each bidder is required to submit a technical proposal in one envelope, and a price bid in another. Napocor opens the envelopes containing the technical bids first, and the bidders who hurdle this round qualify for the second part of the process – the opening of the financial bids. The bidders are then ranked according to their price proposals (based on a levelized quality) and the lowest evaluated bid is chosen as the winning bid.