• Lanka Coal Co. claims agreement allows for imposition of penalties and recover losses if quality deviations confirmed at discharge port

The Lanka Coal Company (LCC) stated the initial payment process for the coal shipment supplied to the Lakvijaya (Norochcholai) Power Plant has commenced, even as concerns over the quality of the consignment remain under review, noting that the relevant agreement includes provisions to impose penalties and recover losses if quality deviations are confirmed at the discharge port.

Speaking to The Daily Morning yesterday (13), the LCC General Manager Namal Hewage said that the Company operates according to contractual terms, under which the coal quality is assessed at both the load port and the discharge port. If the quality recorded at the discharge port is lower than that certified at the load port, he said that penalties are imposed based on six to seven agreed parameters. “This is a normal practice in coal procurement. The agreement has all the provisions to deal with situations like this,” he said, adding that the LCC does not release the full payment upfront. He explained that the LCC initially pays 80 per cent of the value, with the remaining 20% settled later.  The full payment has not yet been completed, as the Company is awaiting the quality report from India, which is due by 16 January of this year (2026). He said that the initial payment must be made under the agreement, as the failure to do so could expose the LCC to legal action by the supplier. He also noted the payment process takes time, as it involves opening a letter of credit, bank processing, and the receipt of the required documentation over several days. “We have commenced the 80% payment process as required under the agreement. Even after this initial payment, there are provisions in place to address any quality issues identified at the discharge port and to recover any related losses. All such matters are dealt with in accordance with the terms of the agreement,” added Hewage.

The comments come amid ongoing controversy over coal imports for the Norochcholai power Plant, after sealed samples from a recently unloaded 60,000 metric tonnes consignment shipped from South Africa by a new Indian supplier were sent to India’s Cotecna, an internationally accredited testing laboratory. The samples were collected in the presence of power Plant officials and dispatched with the consent of specialists at the Plant, with the LCC expecting the final test results to be received this week. Concerns were raised after load port data indicated a lower calorific value than specified, prompting fears of reduced power generation efficiency and financial losses.