Coal Procurement Followed Due Process; Over US$ 2 Million in Penalties Imposed on Substandard Shipments, Says Minister

Cabinet Spokesman and Minister Nalinda Jayatissa said the coal procurement process was carried out in full compliance with established guidelines and approved by the Procurement Commission, rejecting opposition allegations of irregularities.

Of 26 registered suppliers who obtained bidding documents, 10 submitted bids. The bidding period was extended from 21 to 28 days, followed by an appeals period, but no unsuccessful bidder filed an appeal, he claimed.

He explained that coal shipments undergo load port and discharge port inspections by internationally recognized laboratories, with Cotecna appointed for a two-year period to conduct local inspections. Only coal above 5,900 kcal/kg is accepted. Shipments below 5,900 kcal/kg incur double penalties, those between 5,900 and 6,150 kcal/kg face single penalties, and those above 6,150 kcal/kg are accepted without penalty.

The first shipment of 59,831 metric tons failed to meet standards and was fined about US$ 2.07 million. Additional penalties were imposed on subsequent shipments — US$ 436,000 (second), US$ 484,929 (third), US$ 345,652 (fourth), about US$ 500,192 (fifth), and US$ 510,677 (sixth).

So far, 10 ships have arrived, eight have been fully unloaded, and reports for six shipments have been received. The minister added that stronger verification measures have been introduced this year, including authentication of the Indian load port laboratory, and a committee with experts from the University of Moratuwa and ministry officials will review technical issues and assess any potential losses.

Referring to past instances, he noted that fines of USD 7.54 million were recovered during the 2020–2021 period, USD 6.1 million between 2021 and 2022, and USD 7.8 million during 2022–2023 due to substandard coal imports. He emphasized that imposing penalties or removing coal deemed unfit for use is not unusual and is part of an agreed procedure with coal suppliers. If coal passes tests at the port of loading but fails to meet standards after arrival in Sri Lanka, penalties are imposed accordingly. Clarifying public concerns, the Minister stressed that not all coal imports are problematic, and only certain consignments face issues, which are addressed through established mechanisms agreed upon with supplier companies.