• Govt. drags feet on responding to criticism despite policy on transparency and accountability
• Environmentalists question use of sub-standard stock
• Has Energy Min. issued a gag order on Norochcholai officials?
• Will alleged quality shortfall trigger a need to go for emergency power purchases again?

Sri Lanka’s long-troubled energy sector is under scrutiny again following the arrival of allegedly low-quality coal imported from South Africa.

Concerns have emerged that the coal, supplied by Trident Chemphar Ltd. under a long-term contract, is compromising electricity generation efficiency and may also contribute to health risks due to its low quality.

The recent import of the coal stock by the new supplier has stirred up controversy, with Opposition parliamentarians, trade unions, energy analysts, and environmentalists urging the Government to disclose the independent laboratory test results immediately, warning that the implications go beyond financial or energy security.

The issue has been debated in Parliament, with the Minister of Energy questioning whether there were irregularities with the awarding of the tender, the manner in which its quality was verified, and why the coal which arrived freshly at the Norochcholai coal power plant was used immediately, while stocks of older coal from previous suppliers remained unused. 

The Government and the Ceylon Electricity Board (CEB), which scheduled a press conference regarding the issue, cancelled the press meet at the last moment as criticism grew.

Towards the end of 2025, the Lanka Coal Company (LCC) finalised its long-term coal procurement for the upcoming season, with performance bonds deposited by the Indian supplier Trident Chemphar. Acting on behalf of LCC, the Standing High-Level Procurement Committee (SHLPC) had invited sealed bids from registered suppliers for the supply of 1.5 million (±10%) MT of coal to meet the country’s most critical energy requirement.

However, environmentalists have raised serious concerns, arguing that the approved ash content for coal used at the power plant should be between 11% and 16%, and that any stock exceeding this limit should be withdrawn and not permitted for use.

“Higher ash content means a higher risk of mercury-related health problems,” Centre for Environmental Justice (CEJ) Senior Adviser Hemantha Withanage told The Sunday Morning.

As per the sample tender document published by the LCC, Clause 5.5.3 of the tender specifies that if the actual ash percentage of a given shipment is greater than the LCC Standard Value for ash percentage, the price of that shipment of coal shall be reduced in accordance with a defined formula. 

The price adjustment is calculated as: Price Adjustment = (FOB)f × 0.8% ÷ 1.0% × (Actual Value % − LCC Standard Value %). By way of illustration, if the assumed (FOB)f is $ 100 per MT and the actual ash content is 16%, the price adjustment would be 100 × 0.8% × (16% − 11%), resulting in a reduction of $ 4 per MT. No price adjustment shall be applied in cases where the measured ash content is below the LCC Standard Value of 11%.

Withanage alleged that the controversial coal had an ash content of around 21%. He argued that if the Government intended to prove otherwise, it should make the independent laboratory test reports public. 

According to earlier reports quoting LCC General Manager Namal Hewage, the test reports were expected to arrive on 16 January. Similarly, Ministry of Energy Secretary and CEB Chairman Prof. Udayanga Hemapala had indicated that the reports were likely to arrive on 17 January.

However, as of yesterday (24), the report had not been made publicly available.

Attempts by The Sunday Morning to reach LCC General Manager Hewage and Minister of Energy Kumara Jayakody for comment were unsuccessful. 

‘Gag order’?

Despite these timelines, neither the officials nor the Government have released the results or confirmed whether the reports have been received. Sources close to the matter told The Sunday Morning that senior ministry officials had instructed Norochcholai personnel not to provide any information to the media or other parties.

The Sunday Morning reported previously that concerns surrounding the newly arrived coal shipments from South Africa were about the stock being of lower quality. Around 117 MT of this coal is expected to generate only about 285 MWh of electricity, whereas previous Russian coal stocks of 107–109 MT produced roughly 300 MWh.

These figures, sourced from open-source information published by the CEB, indicate a decline in operational efficiency, as a larger quantity of coal is now needed to produce the same amount of power, sources allege. While the cost comparison between the previous and current suppliers shows no major difference, sources noted that the South African coal cost only $ 1.50 less per tonne in comparison to the Russian supplier.

Tender specifics

However, as per Clause 3.4.3 of the sample tender published by the LCC, failure to meet the specified coal quality requirements is addressed separately at the load port and the discharge port. 

At the load port, within 72 hours of receiving the certificate of analysis provided pursuant to Clause 3.5.2, if any of the parameters listed under Clause 5.2 – LCC Reject Values for Coal, namely Gross Calorific Value (GCV), total moisture, ash, volatile matter, size, Hardgrove Grindability Index (HGI), sulphur, and ash fusion temperature, fall within the LCC reject values, the LCC shall reject such coal.

In such an event, the seller is required to promptly recall the rejected shipment at the seller’s own cost and is obliged to offer an alternative supply of coal meeting the quality requirements set out in Clause 2.6. 

Where coal is rejected and an alternative supply is provided, the seller shall not be exempt from paying any liquidated damages arising from delays, and the provisions of Clause 3.8.1 shall apply, with the delay period being calculated up to the time the alternative coal is loaded and trimmed on board the nominated carrying vessel at the port of loading.

With tender specifics being such, the question of why the CEB was rushed to burn the freshly unloaded coal and risk the potential danger to machinery, reduced output, and impact on public health is one which the utility provider has not answered thus far.

The Minister of Energy told Parliament that there had been stocks of coal stockpiled at the coal yard that supplied the Norochcholai power plant when the new stock, which is under scrutiny, was unloaded from the ship via barges. The question of why the fresh stock was sent to the fires and on whose instructions is yet to be established. Neither the Government nor the CEB have answered these questions. 

Some observers have pointed out that since the controversial stock was burnt, the power output from the tonnage burnt is recorded. They charge that there has been a significant reduction in the energy (megawatt) output from the tonnage burnt from the South African stock, which they argue points to the lower quality of the stock.

At the discharge port (the jetty of the plant), upon receipt of the discharge port analysis certificates issued by the independent surveyor in accordance with Clauses 3.5.2 and 3.5.3, if any of the parameters listed under Clause 5.2 – LCC Reject Values for Coal fall within the LCC reject values stated in Clause 5.2 of the schedules, the LCC shall reduce the price in accordance with Clause 5.6 of the schedules for the deviation from the LCC standard values for coal as specified in Clause 5.1.

As per Clause 3.5.2 of the tender, the determination of quality and acceptance of coal for unloading is based on whether the coal shipment falls within the LCC’s reject values stated in Clause 5.2. In the event that the coal shipment does not fall within these reject values, the LCC shall accept such coal. 

Accordingly, the buyer shall issue the Letter of Acceptance (LOA), as provided under Clause 5.15, to the seller within 72 hours after receiving the draft surveying, sampling, and analysis certificates issued at the port of loading. 

The LCC reserves the right to reject any consignment of coal if the LOA is not issued due to non-acceptance of coal quality at the load port. Furthermore, the above certificates shall be accepted only where sampling and analysis have been carried out in accordance with American Society for Testing and Materials (ASTM) standards, as referred to in Clause 5.3, for all the parameters specified in Clause 5.1.

As per Section 5 of the schedules on coal specification, Clause 5.1 sets out the LCC standard values for coal applicable to supplies for the Lakvijaya Power Plant, which is to be operated as a base load unit fuelled by low-sulphur coal.

The standard properties, expressed on an ‘as received’ basis, require a GCV of 6,150 kcal/kg, total moisture of 12% by weight or below, volatile matter of 31% by weight, fixed carbon of 49.5% by weight, sulphur content of 0.5% by weight or below, and ash content of 11% by weight or below. 

The Hardgrove Grindability Index is specified at 50. With regard to size specifications, the grain size above 50 mm shall be 3% by weight or below, and the grain size below 2 mm shall be 22.5% by weight or below. In addition, the ash fusion temperatures under reducing conditions are specified as 1,250°C for Initial Deformation Temperature (IDT) and 1,325°C for Fluid Temperature (FT).

Potential shortfall? 

Sources within the State-owned utility supplier told The Sunday Morning that by November 2025, remaining coal stocks had been projected to last only until January this year, even with 15 pending shipments from the previous long-term contract. 

Following months of inactivity, Cabinet approval to appoint a tender committee was only granted in October 2025. Since then, the LCC has resumed its procurement process, with a new tender for approximately 2.25 million MT of coal expected to cover two unloading seasons.

However, another senior official at the CEB, speaking on condition of anonymity, warned that failure to receive the required coal stocks – or rejection of the current shipments – could trigger a severe power crisis. The official claimed that existing hydro resources were insufficient to meet demand during the dry season, as water storage levels were limited and could only sustain supply for a few months, regardless of rainfall.

However, in the past, the CEB, under multiple governmental administrations, has been charged with creating ‘circumstances’ to trigger emergency power purchases.

“Norochcholai is one of the country’s most critical power plants. Decisions must be made at the right time by officials with proper knowledge of the subject. Sometimes, in an attempt to save millions, the country risks losing billions. Coal quality directly affects costs, and low-quality coal should not be used, as it could damage the plant and result in significant losses – both operationally and for the nation, especially if a power shortage occurs during the dry season,” the official said.

Nevertheless, despite the concerns raised against the recent coal stocks that are being unloaded, Prof. Hemapala told The Sunday Morning that the LCC had followed the agreed payment procedure, with 80% of the total payment released upfront and the remaining balance to be paid once the required reports were received.

In accordance with Clause 3.6.1.1 of the tender document, payments will be made through an irrevocable, unconfirmed documentary Letter of Credit (LC) issued by the Bank of Ceylon. The LC will be issued within seven days of the Expected Time of Arrival (ETA) of the carrying vessel at the port of loading, based on the proforma invoice provided by the seller, as specified in Clause 5.13.

The first payment of 80% will be made upon submission of the required original documents, following the issuance of the LOA under Clause 5.15, with quality and quantity adjustments calculated according to Clause 5.5. 

The final balance payment will be released after submission of the discharge port certificates, in line with Clauses 5.14 and 5.16, and any excess from the first payment will be adjusted against future shipments or the performance security, as stated in the tender.

Meanwhile, Frontline Socialist Party (FSP) Education Secretary Pubudu Jagoda criticised the delay in releasing the Cotecna lab report on imported coal, which reportedly confirmed that the coal was substandard and could damage both the environment and power plants. 

He accused the Government of political interference, alleging manipulation of procurement rules to favour an Indian supplier and shortened tender processes – moves that could result in coal shortages, higher costs, and potential power outages.