The Public Utilities Commission of Sri Lanka (PUCSL) is not considering an electricity tariff increase to offset losses stemming from the recent coal procurement crisis, The Sunday Morning learns.
A senior PUCSL official, speaking on condition of anonymity, said that the regulator would not entertain tariff revisions linked to the procurement failures.
“If the coal is of low quality, the loss must be borne by the responsible parties, including the supplier. We will not pass it on to the public,” the official said, adding that this stance would remain consistent in future reviews.
The official also refuted claims by the Ministry of Energy that the relevant electricity companies had sought a 15% quarterly tariff hike.
“The Ceylon Electricity Board (CEB) has not submitted a proposal with a specific increase. It has only provided revised cost data. We have already completed the quarterly review and will not consider another until the third quarter. It is expected to submit data by mid-May, and until then, there is no basis to consider any increase,” the official noted.
In contrast, Ministry of Energy Secretary Prof. Udayanga Hemapala indicated that the sector may still face financial strain due to the losses, though immediate recovery through tariffs was unlikely.
“The company cannot operate without funds. Losses must be recovered, but not immediately, as that takes time,” Prof. Hemapala said.
“The Lanka Coal Company (LCC) is assessing whether losses can be recovered through penalties. If most of it is recovered, the issue may be mitigated. However, this cannot be confirmed at present, as the process is ongoing. We have requested a full report after the shipment season concludes,” he said.
Prof. Hemapala acknowledged that an Auditor General’s report had estimated losses at Rs. 2.24 billion due to procurement issues. However, broader system impacts could be significantly higher. Internal estimates suggest that substituting lost coal generation with diesel-based power could cost around Rs. 25 billion, while projections from the National System Operator (NSO) indicate an additional Rs. 42 billion burden for the quarter.
“These figures are not final yet. A committee has been appointed to verify the calculations and we expect a report by end-April. Only then can we determine the total loss and the extent of recoveries,” Prof. Hemapala said.
He further said that a critical 40-day gap in coal shipments between November and December had contributed to the crisis, forcing reliance on costly emergency procurement.
“There were initial plans to proceed with spot tenders, but this was cancelled by the Minister in favour of term tenders. Due to procedural constraints, the required shipments could not be secured under the term tender process, leading to the delay,” he explained.
Addressing allegations involving supplier Trident Chemphar Ltd., Prof. Hemapala said the ministry had initiated a verification process regarding testing standards. Concerns had been raised over the use of the Indonesian laboratory PT Mitra SK Analisa Testama Samarinda, with questions surrounding its accreditation status.
“According to the LCC, the primary laboratory is accredited. However, certain testing components were conducted at another facility where accreditation had lapsed. We have instructed the CEB to verify this through the relevant accreditation body to determine the validity of the test reports,” he said.
Despite the operational and financial strain, Prof. Hemapala maintained that the Government remained committed to the least-cost procurement principle.
“Our objective is always to procure at the lowest possible cost. While there may be procedural challenges, the overall policy direction remains unchanged. Ultimately, we aim to ensure cost efficiency in electricity generation,” he added.