By: Staff Writer
January 06, Colombo (LNW): Sri Lanka’s coal procurement process has come under renewed scrutiny following concerns over the quality of the first coal shipment supplied by a new vendor, raising serious questions about electricity generation efficiency, financial exposure, and procurement oversight.
The Lanka Coal Company (LCC) is currently withholding payment for a 60,000-metric-tonne coal shipment imported from South Africa by an Indian supplier, pending receipt of the Discharge Port Certificate. This follows allegations that the coal delivered is of lower quality than contractually expected. According to informed sources, initial documentation from the Load Port Certificate indicates a reduced calorific value, a key performance indicator for coal used in thermal power generation.
Officials within the Ceylon Electricity Board (CEB) have expressed concern that the lower calorific content could undermine operational efficiency at the Norochcholai Coal Power Plant, which supplies nearly 40% of Sri Lanka’s electricity. One senior source claimed that approximately 117 metric tonnes of the newly supplied coal would generate only about 285 megawatts of power, compared to 300 megawatts previously produced using 107–109 metric tonnes of Russian coal. The implication is clear: more coal would be required to generate the same electricity output, driving up operational costs.
While the price difference between the South African coal and earlier Russian supplies is margina estimated at around $1.50 less per tonne—energy experts note that price alone does not determine value. Lower calorific value can translate into higher consumption, increased ash disposal, greater wear on plant equipment, and ultimately higher generation costs passed on to consumers.
The shipment is the first of 25 consignments contracted under a long-term tender finalised toward the end of 2025, following months of procurement delays. Sources warn that if similar quality issues persist across future deliveries, the consequences could extend beyond short-term inefficiencies, potentially affecting national electricity pricing and energy security.
Compounding concerns are allegations surrounding the tender process itself. The procurement has been criticised by political groups, particularly the Frontline Socialist Party (FSP), which alleges irregularities in tender conditions that allegedly favoured the winning bidder, Trident Chemphar Ltd. Claims include significant reductions in coal reserve requirements and references to past controversies involving the company.
LCC General Manager Namal Hewage has acknowledged the existence of allegations but stressed that no payment will be made until the Discharge Port Certificate is reviewed. He maintained that contractual safeguards exist to impose penalties if quality failures are confirmed, while denying that the Load Port Certificate currently indicates a breach.
As Sri Lanka continues to rely heavily on coal-fired power generation, the unfolding situation highlights the high stakes involved in fuel procurement decisions where quality lapses or governance failures can quickly translate into national-level consequences.
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