Sri Lanka’s coal procurement process is under mounting parliamentary scrutiny following explosive findings presented to the Sectoral Oversight Committee on Infrastructure and Strategic Development. At the center of the controversy are discrepancies between shipment documentation and plant-level performance data linked to the Lanka Coal Company and the Ceylon Electricity Board.
Officials revealed that load and discharge port reports did not match quality assessments conducted at the Lakvijaya Power Plant, Sri Lanka’s largest coal-fired facility. The first three shipments were found to have Gross Calorific Values below 5,900 kcal/kg, reducing power generation efficiency. Lower energy content coal requires greater volumes to produce equivalent electricity, inflating operational costs and increasing environmental emissions per unit generated.
Financial implications are significant. CEB reports indicate that while penalties allowed recovery of losses from the first shipment, similar recovery was not possible for subsequent consignments. This inconsistency has fueled allegations of weak contract enforcement and potential manipulation of compliance reporting. Concerns have also been raised about the credibility of Indian laboratory certifications that initially validated the coal’s quality.
Sri Lanka imports nearly all its coal requirements, making procurement oversight critical to macroeconomic stability. In recent years, fuel imports have strained foreign exchange reserves, contributing to broader fiscal pressures. Any inefficiency or inflated pricing in coal contracts compounds these vulnerabilities.
The Public Utilities Commission of Sri Lanka has been instructed to calculate the total financial loss resulting from the use of substandard coal. Analysts estimate that even minor efficiency reductions at Lakvijaya could translate into billions of rupees in additional generation costs annually, costs that may ultimately be passed on to consumers through tariff adjustments.
The Auditor General has also recommended reinstating stricter supplier registration standards that existed before 2023, arguing that relaxed criteria may have exposed procurement processes to higher risk. Lawmakers criticized officials for failing to escalate these recommendations to Cabinet, suggesting possible administrative concealment.
Energy sector transparency has long been a contentious issue in Sri Lanka. With electricity tariffs already politically sensitive, any confirmation of procurement irregularities could have far-reaching economic and political consequences. Independent laboratory testing of disputed shipments has been proposed to restore credibility.
As investigations continue, the controversy highlights the urgent need for stronger institutional safeguards in strategic infrastructure procurement. Without accountability and rigorous quality control, Sri Lanka risks compounding its fiscal and energy challenges at a time when economic stabilization remains fragile.
