Sri Lanka’s troubled coal procurement has moved beyond questions of tender procedure and fuel quality to a more immediate problem: the country’s only coal power plant has lost thousands of megawatt hours of low-cost generation after running short of coal.
Around 32,350 MWh of generation from the 900 MW Lakvijaya Power Plant in Norochcholai had been lost after the replacement for a rejected emergency coal shipment had arrived eight days behind schedule, officials disclosed before Parliament’s Sectoral Oversight Committee (SOC) on Infrastructure and Strategic Development this month.
The loss is equivalent to nearly 36 hours of continuous operation of the entire 900 MW plant at full capacity. Alternatively, it represents around four-and-a-half days of full-load generation from one of Lakvijaya’s three 300 MW units.
More significantly, officials said that the plant had exhausted the 100,000 MT coal buffer it traditionally maintained against shipping delays, leaving electricity generation vulnerable should future consignments fail to arrive as scheduled. The immediate shortage is the latest consequence of a coal procurement process that has been under scrutiny for months, including by the National Audit Office (NAO).
Trouble starts with Trident
At the centre of the controversy is the 2025/’26 term tender awarded to India’s Trident Chemphar. Of the 25 coal shipments ordered under the contract, only 19 ultimately arrived. All 19 were delayed, while the coal supplied failed to meet the parameters necessary for optimum power generation, according to official disclosures.
A special audit by the NAO into the procurement identified a series of shortcomings involving supplier registration, quality verification, shipment delays, and the failure to import coal during available windows. The audit also raised questions over Trident’s eligibility at the time bids were called and concerns surrounding the testing of coal quality at the loading port.
The procurement was slow from the outset. The first shipment, expected in November 2025, arrived only at the end of December. As subsequent shipments fell behind schedule, coal stocks at Lakvijaya came under increasing pressure.
The problem was not limited to the number of shipments received. Coal quality directly affects the amount of fuel required to generate electricity. Lower-calorific-value coal can require a greater quantity to produce the same amount of power, increasing the specific coal consumption of the plant.
The NAO consequently warned of substantial financial losses arising from additional coal consumption and reduced generation. These losses later became clearer through operational data. Electricity Generation Lanka Ltd. (EGL), the successor generation company to the Ceylon Electricity Board, calculated an estimated Rs. 5.68 billion in direct financial losses based on operational data recorded from 1 March to 30 June this year.
According to an official report, the estimate covered only financial losses caused by additional coal consumption resulting from the higher specific coal consumption rate compared with the historical average under normal operating conditions. It did not include the cost of compensating for any resulting energy shortfall through other electricity generation sources.
That distinction is significant. If Lakvijaya cannot produce the expected amount of relatively low-cost coal-fired electricity, the system may have to depend on alternative generation to bridge the shortfall, adding another layer of costs beyond the losses calculated at the plant itself.
Emergency tender to plug the gap
With the Trident procurement falling short, Lanka Coal Company Ltd. (LCC) was forced to turn to emergency procurement. Earlier this year, LCC ordered 300,000 MT of coal from India’s Taranjot Resources Ltd., consisting of five shipments of around 60,000 MT each, to make up for the shortage.
However, the emergency procurement itself encountered difficulties. The fifth consignment failed to meet the required parameters and was rejected. LCC subsequently instructed Taranjot to provide a replacement shipment. That replacement was scheduled to arrive on 27 August. It did not reach Sri Lanka until 4 September.
During an earlier meeting of the SOC, Lakvijaya officials had warned that any delay to the fifth emergency shipment could cause a crisis. The warning proved prescient. With the plant’s buffer stock already exhausted, there was insufficient coal to bridge the eight-day delay. Officials subsequently told the SOC that approximately 32,350 MWh of generation was lost because coal was unavailable.
The scale of that loss is considerable. Lakvijaya consists of three 300 MW units with a combined installed capacity of 900 MW. The lost generation is therefore roughly equivalent to operating the entire plant continuously at full capacity for almost 36 hours.
Measured against a single 300 MW generating unit, it represents around four-and-a-half days of continuous full-load operation. These losses are over and above the Rs. 5.68 billion in estimated direct losses already calculated in relation to the Trident coal.
No buffer left
The delayed emergency shipment has also exposed what officials describe as an ongoing vulnerability at Lakvijaya: the disappearance of its traditional coal buffer. Plant officials told the parliamentary committee that Lakvijaya had requested around 2.16 million MT of coal but had received only approximately 1.996 million MT.
“The main issue is that the required amounts didn’t come to the plant,” an official told the committee. “We asked for 2.16 million MT, we got 1.996 million MT. We have never before had a shortage because we maintain a buffer stock of 100,000 MT.”
That 100,000 MT reserve had historically provided the plant with protection against disruptions in the coal supply chain. It is no longer there.
This means a future shipment that is delayed, is rejected because of quality problems, or otherwise fails to reach the country before existing stocks are consumed could once again leave Lakvijaya without sufficient coal to operate normally. The problem is therefore no longer confined to losses already incurred. It has become a question of the security of future electricity generation.
Quality matters as much as quantity
The controversy surrounding the Trident procurement has also demonstrated why simply counting the number of tonnes delivered does not provide a complete picture of the value received by the electricity sector. The NAO’s examination highlighted the implications of coal that failed to perform at the expected level.
Coal quality, including its calorific value, determines how much electricity can be extracted from a given quantity of fuel. When coal performs below the expected parameters, more fuel may have to be burnt to produce the same amount of electricity. That translates into higher coal consumption, faster depletion of stocks, and additional financial costs. It can also constrain the plant’s ability to generate at optimum capacity.
The NAO therefore identified not only weaknesses in the procurement process but also the potential consequences those weaknesses could have for the wider electricity system. The Rs. 5.68 billion loss subsequently calculated by EGL underscores the scale of that impact. Crucially, however, that figure does not represent the entire cost to electricity consumers. The calculation was confined to additional coal consumption. It did not include all costs arising from replacing lost coal-fired generation with electricity from other sources.
From tender failure to power shortage
The chain of events demonstrates how procurement failures can eventually become an energy security problem. The 2025/’26 term procurement failed to deliver all 25 planned shipments. Of those ordered, only 19 arrived. The coal that did arrive was delayed and did not provide the optimum generation performance expected.
The shortfall then prompted emergency procurement. One of those emergency shipments failed the required parameters and had to be replaced. The replacement arrived eight days late. By that point, Lakvijaya’s buffer stock had been exhausted. The result was the loss of around 32,350 MWh of generation. What began as shortcomings in procurement, therefore, ultimately translated into an actual loss of electricity production.
Who pays for losses?
Attention has now shifted towards recovering the financial cost from suppliers. SOC Chair, Member of Parliament (MP) S.M. Marikkar has maintained that losses arising from the shortfall in megawatt hours should be borne by the supplier. This, he said, should be separate from delay charges imposed under the contract. “The ministry must intervene immediately,” Marikkar directed.
The issue is particularly significant because the various losses cannot be captured in a single figure. There is the estimated Rs. 5.68 billion direct financial loss arising from additional coal consumption linked to the Trident procurement. There are also losses associated with the electricity that Lakvijaya could not generate and the cost of obtaining replacement power from elsewhere in the system. In addition to these comes the 32,350 MWh of generation lost following the delay of the fifth emergency shipment.
The first shipment for the new coal season, under the tender won by India’s Aditya Birla, arrived on schedule on 16 September. But the arrival of one shipment does not eliminate the underlying vulnerability. Without the traditional 100,000 MT buffer stock, Lakvijaya has less room to absorb another substantial delay or rejected shipment. The NAO findings and subsequent disclosures before Parliament consequently point to a problem extending beyond one supplier, one tender, or one late ship.
For a power system heavily dependent on Lakvijaya for baseload generation, failures in coal procurement, quality control, and delivery schedules can ultimately translate into fewer megawatt hours of low-cost electricity, as well as potentially higher costs for the country and its electricity consumers.
No major issue: Energy Ministry
Despite delays in the arrival of one or two coal shipments, Sri Lanka has sufficient coal stocks to maintain uninterrupted operations at the Lakvijaya Coal Power Plant, while increased hydropower generation following heavy rainfall has further strengthened the country’s electricity supply, according to the Ministry of Energy.
Speaking to The Sunday Morning, Ministry of Energy Secretary G.M.R.D. Aponsu said that there was currently no shortage of coal stocks, although minor delays had been experienced with one or two scheduled shipments. “There is no shortage of coal stocks. There has been a slight delay in one or two shipments, but the shipments are coming,” Aponsu said.
He stressed that the delays were not significant enough to disrupt electricity generation at the power plant and that its operations would continue without being affected by the shipment schedule. “The delay will not affect the functioning of the Norochcholai Coal Power Plant,” he said, dismissing concerns that the delayed shipments could create an immediate problem for coal-fired electricity generation.
Meanwhile, Aponsu noted that hydropower generation was also making a substantial contribution to the national electricity supply following the heavy rainfall experienced in recent weeks. According to him, the prevailing rainfall has resulted in reservoir levels rising significantly, with water levels in major reservoirs currently at or close to maximum capacity. The improved water availability has consequently enabled a greater contribution from hydropower generation.
With adequate coal stocks available for thermal power generation and favourable reservoir levels supporting hydropower production, Aponsu said that the ministry did not foresee any major issue affecting electricity generation at present. “Hydropower generation is also contributing significantly due to the heavy rains and reservoir levels are at maximum levels. Therefore, there is no major issue,” he said.