Sri Lanka lost US$1,575,630 on coal bought for the Lakvijaya power plant in 2015 and 2016 because the terms of a supply contract were altered after bidding had closed, the Presidential Commission of Inquiry into Coal Procurement was told, NewsFirst reported.
The figure comes from a special audit by the Auditor General’s Department covering coal procurement for Lakvijaya from 2009 to June 2016. It was put before the commission during Tuesday’s proceedings, in the testimony of D. Amaratunga, a former Additional Secretary to the Ministry of Power and Energy.
Two specifications, each relaxed tenfold
The contract was with Liberty Commodities, selected through an emergency procurement process to supply coal to the Norochcholai plant.
Two quality thresholds in the bidding documents were different by the time the final agreement was signed:
- Sulphur content was specified at 0.1% at tender. The signed agreement set it at 1%.
- Ash content was specified at 1.0% at tender. The signed agreement set it at 10%.
Each limit was loosened by a factor of ten. Sulphur and ash are the two specifications that most directly determine what a consignment of thermal coal is worth and how hard it is on a boiler — a supplier able to deliver against a 1% sulphur ceiling rather than 0.1% is able to deliver a materially cheaper grade for the same contracted price.
The audit records that these changes were made without Cabinet approval.
The loss compounded across later purchases
The revised agreement was not confined to the original consignment. The audit found the same disadvantageous terms were carried into the second and fourth spot procurements, so the excess payments accumulated:
| Procurement | Excess paid |
|---|---|
| First | US$173,134 |
| Second | US$391,192 |
| Fourth | US$1,011,304 |
| Total | US$1,575,630 |
The breakdown reconciles exactly to the headline figure, and the largest single overpayment — nearly two-thirds of the total — came on the fourth purchase, three contracts after the terms were first changed.
A second, larger loss the headline figure does not capture
The audit identifies a separate failure that cost more than the overpayments did.
The tender documents for the emergency procurement had specified the size and weight of coal particles, but the contract’s Quality Price Adjustment section recorded “Size Consists Not Applicable” — removing the basis on which the buyer could have charged the supplier for delivering off-specification coal.
Had those criteria been retained, the Auditor General found, surcharges of US$758,358, US$562,763 and US$409,537 could have been recovered from the supplier on the first, second and fourth procurements respectively. That is US$1,730,658 in foregone recoveries — more than the US$1.58 million in excess payments that forms the headline of the audit finding.
Taken together the two findings describe a contract that paid above value and then gave up the contractual means of clawing any of it back.
Where this sits in the commission’s work
The commission has been taking evidence on tender estimates and procurement paperwork through August, after a phase in which the Criminal Investigation Department seized coal procurement files and reviewed electronic data held by their custodians. It called for public submissions and set a complaints deadline in May.
Tuesday’s evidence differs from most of what the commission has heard so far in one respect: it is a quantified loss traced to identifiable contract clauses, rather than testimony about process.
NewsFirst reports that President’s Counsel Maithri Gunaratne served as Chairman of the Lanka Coal Company during the period covered. The report does not state what role, if any, the commission has attributed to him, and no finding against any individual has been reported.
Not reported
The report does not say which body approved the altered terms, who signed the amended agreement, why the third procurement is absent from the audit’s list of affected purchases, or whether the commission will summon anyone named in the audit. Neither the Ceylon Electricity Board nor Liberty Commodities has responded publicly.
Sourcing note
NewsFirst is the only verified newsroom to have filed on this session. The Daily Mirror’s latest-news listing carried nothing on coal procurement, and Ada Derana returned a CloudFront 403 domain-wide throughout this cycle. The article’s own byline did not render; its date is taken from NewsFirst’s URL path and its placement in the outlet’s latest listing, and the text refers to the proceedings as having taken place on Tuesday the 8th.
