A special audit report by the National Audit Office has revealed several serious issues in the coal procurement process for the Lakvijaya Power Plant during the 2025/2026 season, including financial losses, procurement irregularities, and quality concerns.
Here are seven key findings from the audit report:
1. Unregistered supplier selected for major tender
The long-term coal supply tender for 2025/2026 was awarded to India-based Trident Chemphar Limited, despite the company not having completed registration requirements at the time bids were called.
2. Coal testing conducted using questionable laboratory
Coal testing at the loading port was carried out using a laboratory whose licence had expired, raising concerns over the reliability of quality reports for 12 shipments.
3. Rs. 2.23 billion estimated loss due to poor coal quality
The audit estimated an additional consumption-related loss of approximately Rs. 2,237.7 million due to lower-quality coal requiring higher usage to generate electricity.
4. Additional electricity required due to reduced power generation
Because coal quality prevented full generation capacity, authorities had to consider alternative power sources, with additional energy requirements estimated at up to 114 million kWh under certain conditions.
5. Possible penalty of Rs. 2.33 billion
The audit noted that penalties amounting to approximately Rs. 2,332.5 million could potentially be recovered from the supplier due to performance shortfalls.
6. Failure to import coal during available 40-day window
Authorities failed to procure coal during a 40-day window between November and December 2025 when imports were possible, contributing to supply constraints.
7. Emergency procurement from lower-quality supplier
Due to delays, an emergency purchase of 300,000 metric tons of coal had to be made from a supplier that had previously failed to meet required quality standards.
The audit warned that these issues could negatively affect continuous electricity supply and recommended strengthening procurement controls and quality verification processes.
The Lakvijaya Power Plant contributes between 30% and 40% of Sri Lanka’s national electricity supply, making coal procurement critical for uninterrupted power generation. (Newswire)
