Taipower retenders the 693,000 tons of coal supply

Taiwan Power Company
Fuel Department
9th Floor, 242 Roosevelt Road, Section 3, Taipei 100, Taiwan, R.O.C.

COAL SUPPLY BID INVITATION LETTER

Date: March 22, 2004
Subject: Coal Supply Bid Invitation
INVITATION TO BID NO. TPC9303A(3)

Gentlemen:

Taiwan Power Company ("Taipower") is inviting bids for the supply of coal from countries and districts abroad on the following terms and conditions:

1.The minimum acceptable quality specifications (based on ISO standards) shall be as follows:
Gross Calorific Value (kcal/kg, as received): 5,000 min.*(1)
Total Moisture (%, as received): 28 max
Ash Content (%, air dried): 15 max.
Total Sulfur Content (%, air dried): 1.1 max.
Volatile Matter (%, air dried): 28 min.
Fixed Carbon (%, air dried): 60 max.
Grindability (Hardgrove Index Value): 42 min.
Ash Fusion Temperature (?C, under reducing condition, H=W): 1,150 min.
Size: 50 x 0 mm
Size above 50 mm (%): 5 max.
Fines under 2 mm (%): 35 max.
Na2O in Ash (%): 2.0 max.*(2)

*(1) Gross Calorific Value greater than 6,900 Kcal/Kg will be treated as 6,900 Kcal/Kg.
*(2) If both actual (a) CaO+MgO>Fe2O3, and actual (b) CaO+MgO+Fe2O3>20% are met, then Na2O in Ash can be raised to 5.0% max.

2. The quantity of coal to be purchased is 693,000 Metric Tons, which shall be procured by eleven (11) lots. Each lot may be performed by either one (1) Panamax Size vessel or two (2) Handy Size vessels. The Panamax Size vessel (or Handy Size vessels, as applicable) of each lot shall load 63,000 (or a shipload between 25,000 to 45,000, as applicable) Metric Tons of coal plus or minus ten percent (10%) at shipmaster's option and subject to 12.5 meters draft limitation in Taichung Port.

3. Each lot of coal to be purchased by Taipower and delivered by a bidder shall be entirely supplied from a single mine. Supply of coal for any shipment from more than one mine is not allowed. The bidder is requested to provide in the TECHNICAL AND COMMERCIAL PROPOSAL a copy of valid certificate of analysis for coal quality (accepted by both buyer and seller for the shipment in question) issued by an independent inspection company of international standing for a shipment supplying at least 25,200 MT previously exported within the past five years from the mine offered, and the quality items shown in the certificate shall meet Taipower?s coal quality specifications. If the quality specification items required by all of the Bidder?s customers do not include all the quality items required under this tender, then the certificate of analysis shall at least include Gross Calorific Value, Total Moisture, Ash Content and Total Sulfur Content. Bidders? Proposals failing to meet this requirement will be rejected. In addition, upon request by Taipower, a bidder shall provide to Taipower's satisfaction relevant supporting documents including certificate issued by relevant authorities of exporting country to demonstrate the legal status and current situation of the coal mine from which the coal will be supplied. If a shipment of coal offered by Bidder is produced by an illegal coal mine producer, such shipment will not be accepted.

4. The coal to be delivered at the Port of Loading shall be in accordance with the following delivery schedule:

5. Bidders may offer to supply one or more than one lot. A bidder who wants to bid on less than all of the lots for which Taipower is seeking bids may choose the lot(s) on which to bid.

6. Awards will be made on a lot-by-lot basis. A bidder may bid different price(s) for different lot(s).

7. Bidders may quote prices on both an F.O.B.T. Port of Loading and C&F Port of Discharging, Taiwan basis (So called C&F Bidders) or only an F.O.B.T. Port of Loading (So called FOBT Bidders.). For the C&F Bidders, if the lot is performed by two (2) Handy Size vessels, the quoted freight shall be the same for both Handy Size vessels. For the FOBT Bidder, Taipower has the right to use its own estimated freight for the Bidders? proposed Port of Loading (please see the ATTACHMENT I) to be used in the calculation of evaluated C&F price as stated in the Section 4.4 of the INSTRUCTIONS FOR BIDDING. Taipower has the right to award the contract on either a F.O.B.T. Port of Loading or C&F Port of Discharging, Taiwan basis, and to specify at the time of issuing the Notice of Award pursuant to Section 5.1 of the INSTRUCTIONS FOR BIDDING whether the coal is to be delivered F.O.B.T. Port of Loading or C&F Port of Discharging, Taiwan.

In addition, if:

(A) The lowest-price-bidder for the lot in question is an FOBT Bidder and there are other C&F Bidder(s) quoted for the lot in question:

Taipower will charter the vessel(s) once for the lot in question based on the Taipower?s attached loading rate and demurrage rate (please see the ATTACHNMENT II) applicable for the Port of Loading of the said Bidder and the delivery schedule stated above within seven (7) days after the opening date of the PRICE PROPOSALS. However, if Taipower fails to charter vessels to perform the lot in question, Taipower has the right, without further liability, to award the said lot to the C&F Bidder with the lowest evaluated C&F price among the C&F Bidders.

(B) The lowest-price-bidder for the lot in question is an FOBT Bidder and there are no C&F Bidder(s) quoted for the lot in question:
Taipower will charter the vessel(s) for the lot in question based on the Taipower?s attached loading rate and demurrage rate (please see the ATTACHNMENT II) applicable for the Port of Loading of the said Bidder and the delivery schedule stated above. However, if Taipower fails to charter vessel(s) to perform the lot in question within fifteen(15) days after the opening date of the PRICE PROPOSALS, Taipower has the right to cancel the said lot without further liability.

8. A bidder?s ocean freight for the shipment shall be offered based on the condition of discharging rate of 20,000 Metric Tons for Handy Size vessel, 22,000 Metric Tons for Panamax Size vessel and 24,000 Metric Tons for Cape Size vessel per weather working day of 24 consecutive hours, Saturdays, Sundays and holidays included. Such condition is applicable to Taipower?s Coal Terminals in Kaoshiung Port and Taichung Port, one of which will be designated by Taipower as the discharging port in its sole discretion. (Please refer to Article 12 of the GENERAL TERMS AND CONDITIONS).

9. All bids will be compared on evaluated C&F Port of Discharging, Taiwan basis in accordance with the formula specified in Section 4.4 of the INSTRUCTIONS FOR BIDDING.

10. (a) As stated above, the award will be made on a lot basis. However, if the successful offerors using the following ports of loading are awarded more than one gearless panamax shipment, then Taipower has the right to combine any two (2) gearless panamax shipments awarded to said successful offerors into one (1) capesize shipment under one (1) contract with the delivery terms of F.O.B.T. Port of Loading.
(b) Under the cases of combining two panamx shipments into one capesize shipment, the nominal shipload of such capesize shipment shall be 126,000 metric tons plus or minus ten percent (10%) at shipmaster?s option. Unless otherwise agreed, the delivery schedule of such capesize shipment will be the arithmetic average in time of the delivery schedules of these two (2) gearless panamax shipments. In addition, the F.O.B.T. Base price of such capesize shipment shall be the average of the F.O.B.T. price of these two (2) gearless panamax shipments. The loading rate and demurrage/despatch rate of said capesize shipments are listed as follows:

11. Shipments from the Chinese Mainland shall be made via a third country or area other than the Chinese Mainland; hence, the name of the Port of Export set forth by bidders in page 3 of the TECHNICAL AND COMMERCIAL PROPOSAL shall not be located in the Chinese Mainland.

12. All bids and bid bonds must be received by the Taipower?s Department of Fuels by 4:30 PM, March 31, 2004 (Taipei time) (the "Bid Due Date"). Late bids or bid bonds will be unacceptable and will be returned unopened.

13. TECHNICAL AND COMMERCIAL PROPOSALS will be publicly opened by Taipower at the offices of Taipower at 09:30 AM, April 1, 2004 (Taipei time), unless a change to such expected time is posted in public. In addition, said opening day will be postponed to the next day if said opening date is not a working day.

14. Bids must be firm and must remain available for acceptance by Taipower until April 30, 2004 (Taipei time).

Enclosed herewith you will find the CONTRACT AGREEMENT form and the following bidding documents:
(i) INSTRUCTIONS FOR BIDDING;
(ii) TECHNICAL AND COMMERCIAL PROPOSAL form;
(iii) PRICE PROPOSAL form; and
(iv) GENERAL TERMS AND CONDITIONS ("GENERAL TERMS").

If you have any questions concerning this Bid Invitation Letter, CONTRACT AGREEMENT form or the bidding documents, please address your questions in writing to Department of Fuels, Taiwan Power Company, 9th Floor, 242 Roosevelt Road, Section 3, Taipei 100, Taiwan, R.O.C. (Telex: 27254 TPCFUEL; Telefax: 886-2-23670597/886-2-23678593) no later than March 24, 2004. Taipower will provide a written reply no later than March 27, 2004, and may publish such reply if necessary.

Taipower shall have the right in its sole discretion to cancel or withdraw this invitation at any time and assumes no obligation or liability whatsoever with respect to a bidder?s preparations or the costs incurred in responding hereto.

Very truly yours,
Stanley C. M. Tsai
Section Chief of Thermal Coal Section for
Director of Department of Fuels
Taiwan Power Company

Editor's note: Taipower's bidding document can be downloaded at: http://203.69.131.3/material/TPC9303A(3).doc