• CEB internal investigation report due in a week
• Min. Secy says may need emergency purchasing if coal is rejected
• CEB investigates use of new stocks before previous stocks exhausted 

An internal investigation has been initiated within the Ceylon Electricity Board (CEB) to examine the circumstances under which a disputed consignment of coal has been used at the Lakvijaya (Norochcholai) Coal Power Plant, according to Ministry of Energy Secretary Prof. Udayanga Hemapala.

Prof. Hemapala said that the inquiry report was expected within about a week, and that the issue was not linked to fraud.

He told The Sunday Morning that the internal probe was instead focused on operational and procedural decisions taken at the plant level, particularly in relation to the release and public disclosure of documents, and not on the procurement process itself, which he stressed had followed standard tender procedures.

Prof. Hemapala’s comments come amid an escalating controversy over allegations that substandard coal had been used in the Norochcholai boilers before final quality test results were available, potentially resulting in significant financial losses to the State and triggering parallel scrutiny by Parliament and the Criminal Investigation Department (CID).

The Ministry Secretary cautioned against drawing premature conclusions, noting that definitive laboratory reports on coal quality were still pending. “It is premature to describe this as an ‘issue’ when the final reports have not yet been agreed upon,” he said, explaining that while local laboratory results and international test results had shown disparities, the Government would rely on the findings of the internationally recognised independent laboratory in accordance with the contract.

Under the coal supply agreement, he said that the supplier was entitled to a 10-day testing period after the full discharge of coal at Norochcholai, and that timeframe had not elapsed yet as of mid-January. 

Once the final report was received and mutually accepted, he said that the authorities would act strictly in line with contractual provisions. Sealed samples from the disputed consignment have been sent to Cotecna in India for independent verification, and the outcome of those tests is expected to be central to the final determination.

The controversy centres on claims that recent coal shipments, reportedly sourced from South Africa through a new supplier, failed to meet tender specifications, particularly with respect to ash content and calorific value.

Based on these claims, parliamentarians and sectoral oversight bodies have suggested that the State may have suffered losses estimated at around Rs. 700 million, with some estimates running higher once efficiency losses are fully calculated.

Addressing one of the central questions raised in Parliament as to why the coal was used before all quality tests were completed, Prof. Hemapala claimed the explanation provided by plant management was that direct feeding of coal upon arrival was a standard operational practice.

Prof. Hemapala said that according to the Norochcholai Power Plant Manager, newly-arrived coal consignments were often fed directly into the plant for logistical efficiency and cost reduction, rather than first being transferred to the coal yard for storage and later handling. 

“This is reported as a normal practice and not something unique to this particular shipment,” he said, adding that operational decisions were typically guided by ease of handling and cost considerations, not by the origin of the coal.

He also rejected suggestions that the choice to use this consignment over another Russian-origin shipment was unusual, reiterating that origin was not the determining factor in day-to-day plant operations.

Prof. Hemapala categorically stated that at present there was no basis for an investigation into the procurement process itself. “This is not a matter of fraud. The tender procedures were followed and the contract was awarded to the lowest bidder who met all requirements. It is then the responsibility of the supplier to deliver coal that meets the agreed specifications.”

Under the contract, he explained, penalty clauses would be triggered if quality thresholds were not met. If the calorific value falls below 5,900 kcal/kg, the supplier would not be paid the full contract price and penalties would apply. If a subsequent shipment also fails to meet specifications, the purchaser has the option, though not the obligation, to terminate the contract.

While ruling out wrongdoing in procurement, Prof. Hemapala confirmed that an internal inquiry was underway within the CEB, focusing on the actions of officials who had released documents and information without what he described as adequate internal due diligence.

He added that he was not aware of any CID investigation into the conduct of Norochcholai officials at this stage, although the broader issue had been discussed at parliamentary sectoral oversight committee meetings.

Separately, the matter has been taken up by Parliament’s Sectoral Oversight Committee on Infrastructure and Strategic Development, which has questioned officials on coal procurement, testing protocols, and the operational decision to use the coal before final test clearance.

Prof. Hemapala warned that rejecting the consignment outright could pose operational risks, given the limited time available to source alternative supplies. “If the coal is ultimately rejected, we would have to act very quickly,” he said, explaining that a full fresh tender process would not be feasible in the short term. In such a scenario, the authorities may be forced to pursue an emergency tender or a government-to-government arrangement to prevent a shutdown of the country’s largest thermal power plant. 

When The Sunday Morning questioned Prof. Hemapala about the cost of emergency power, how the Government would cover losses from the non-cancellable shipment, and whether the bid bond would be forfeited if the company were to be found in breach, he responded that these questions could not be answered yet, as the situation was still under evaluation. He said updates would be provided by tomorrow (19).