Substandard coal: problem lies somewhere, Prez cannot bluff

Finally, President Anura Kumara Dissanayake himself admitted that inferior quality coal had been supplied for power generation. Simultaneously, the Auditor General reports that the procurement process is scarred with some grey areas.

Come what may, it has once again cast a spotlight on the vulnerabilities within Sri Lanka’s energy sector. While the President clarified that the tender procedure had not been violated, the admission that coal of substandard quality had reached the country’s main coal power plant raises troubling questions about the effectiveness of the oversight mechanisms governing such procurements. The distinction made by the President is important. He did not allege fraud in the tender process itself. According to him, the procurement procedure had been followed. However, the fact that inferior coal had been delivered despite the process being intact suggests that a problem lies  somewhere. In practical terms, the implications are serious. Coal remains a key component of Sri Lanka’s electricity generation mix. The Lakvijaya coal power plant in Norochcholai produces a significant share of the country’s electricity. When the plant operates below its optimal efficiency due to poor fuel quality, the consequences ripple across the entire power system.

Inferior coal does not burn with the same calorific efficiency as the grade required for power generation. This means that more coal must be used to produce the same amount of electricity. The immediate result is an increase in the cost of generation. When such inefficiencies occur within a system already under financial strain, the burden inevitably falls on the consumer. Sri Lanka has already experienced steep electricity tariff adjustments over the past few years. These increases were justified largely on the grounds that tariffs must reflect the true cost of electricity generation under the country’s economic reform programme. Cost-reflective pricing has been one of the key conditions associated with the restructuring of the power sector under the International Monetary Fund’s Extended Fund Facility programme.

However, the concept of cost-reflective pricing assumes that the costs themselves are legitimate and unavoidable. When inefficiencies arise due to weaknesses in procurement monitoring or quality verification, the equation becomes problematic. This is where the issue becomes more than a technical matter. It becomes a question of governance.

If the tender procedure was indeed intact, as the President has stated, then attention must turn to the safeguards built into the procurement framework. Coal supply contracts typically include strict specifications regarding calorific value, ash content, moisture levels, and other parameters that determine fuel quality. They also include testing procedures designed to ensure that the delivered cargo meets those specifications. How, then, did inferior coal reach the power plant? Was the quality testing inadequate? Were the inspections conducted properly at the point of loading and upon arrival? Were the contractual penalties strong enough to deter suppliers from cutting corners? These are questions that cannot be brushed aside with a simple acknowledgement that the coal was substandard. The President cannot brush aside the question by saying that he or anybody for that matter cannot taste coal to test quality.

The government has indicated that penalties will be imposed on the supplier responsible for delivering the inferior coal. While this is a necessary step, it addresses only part of the problem. Sri Lanka has long struggled with controversies surrounding procurement in the energy sector. Over the years, various administrations have faced criticism regarding fuel purchases, power generation contracts, and emergency power arrangements. 

At a time when households and businesses are already coping with rising living costs, revelations about inferior fuel entering the power generation system are unlikely to inspire confidence. Electricity tariffs are not merely an economic issue; they are deeply tied to the daily lives of citizens and the competitiveness of the national economy. Industries depend on reliable and affordable electricity to remain viable. Small businesses operate on thin margins and are particularly sensitive to energy costs. Even ordinary households now treat electricity bills as a significant component of monthly expenditure.

Against this backdrop, the discovery of inferior coal inevitably raises the question of whether the country’s energy governance mechanisms are robust enough to protect the public interest. Sri Lanka’s continued dependence on imported fossil fuels also adds another layer of vulnerability. Every shipment of coal involves complex international supply chains, contractual arrangements, and quality verification procedures. This is why transparency and rigorous monitoring must remain central to the management of the power sector. The government has repeatedly emphasised its commitment to reforming state institutions and strengthening governance. If that commitment is to be taken seriously, the issue of inferior coal must be examined thoroughly. In the end, the real issue is not simply the arrival of inferior coal. The real issue is whether the systems designed to prevent such occurrences are functioning as they should.