A special audit report issued by the National Audit Office has exposed major financial losses, procurement lapses, and systemic weaknesses in the coal purchasing process for the Lakvijaya Power Plant during the 2025/2026 season, raising fresh concerns over governance and energy security.

The report was presented to Parliament yesterday (7) by the Speaker.

The report (SPR/2026/01), which examines coal procurement for the Norochcholai-based facility operated by the Ceylon Electricity Board, details the following key findings:

1. 1. Massive losses due to overconsumption
   The audit estimates a loss of Rs. 2,237.7 million due to increased coal consumption required to generate one kilowatt-hour of electricity. This was directly linked to poor-quality coal supplied by Trident Chemphar Limited, which failed to meet required standards, reducing efficiency.
3. 2. Significant recoverable penalties
   The report states that penalties amounting to Rs. 2,332.5 million are recoverable from the supplier. These penalties arise from deviations in key quality parameters, including Gross Calorific Value (GCV), sulfur content, and ash content.
5. 3. Failure to meet electricity demand
   Due to inferior coal quality, the plant’s control unit was unable to generate the desired electricity capacity. As a result, an additional 76 million to 114 million kilowatt-hours had to be sourced from alternative, potentially more expensive, power generation sources.
7. 4. Supply shortfalls and missed procurement window
   Out of 18 planned coal cargoes, only 12 had been unloaded by 20 March 2026. The Lanka Coal Company also failed to procure a critical shipment within a 40-day window between November and December 2025, a period considered favourable due to weather conditions for unloading.
9. 5. Emergency procurement from previously non-compliant supplier
   Amid shortages, 300,000 metric tons of coal were procured through emergency procurement in March 2026. The selected supplier, Taranjot Resource (Pvt) Ltd, had previously failed to supply coal meeting required quality standards, according to audit observations.
11. 6. Substandard coal accepted below rejection thresholds
    The audit found that coal supplied by Trident Chemphar Limited frequently fell below required GCV levels. Some consignments were recorded at or below the “rejected level” of 5,900 kcal/kg, yet were still accepted and utilised.
13. 7. Breaches in supplier registration criteria
    The audit identified violations of procurement fairness, with suppliers registered despite failing to meet eligibility criteria. These included failure to pay full registration fees and prior records of supplying coal below required standards. One supplier had been registered despite earlier failure to meet heat value requirements.
15. 8 Lack of independent quality verification
    The Lanka Coal Company failed to ensure independent inspections of coal cargoes at ports of loading. In addition, some inspection reports had been issued by entities without proper accreditation to test coal in accordance with required standards.
17. 9. Strategic risk to national electricity supply
    The report underscores that the Lakvijaya Power Plant accounts for between 30% and 40% of Sri Lanka’s electricity generation. Any disruption in coal procurement therefore poses a direct threat to the continuity and stability of the national power supply.
19. 10. Weak internal controls and need for reforms
    The Auditor General has highlighted weaknesses in internal control systems and recommended corrective measures in Chapter 7 of the report. These include strengthening supplier registration systems, ensuring the use of properly qualified inspectors, and improving oversight and compliance mechanisms.