TheCapitalist – Sri Lanka has imposed penalties amounting to $27 million on the first 15 coal shipments received under a long-term supply agreement after laboratory testing found the imported coal failed to meet required specifications, according to Deputy Energy Minister Arkam Ilyas.
Speaking at a media briefing, Ilyas said the penalties were imposed on shipments supplied under a term contract involving 19 consignments, of which 17 have already arrived in the country. Authorities found that several shipments recorded lower Gross Calorific Value (GCV) levels than specified, prompting financial penalties.
“We have imposed a $27 million penalty from the first 15 shipments,” Ilyas stated, adding that this was the first time Sri Lanka had imposed fines for delayed coal deliveries.
The dispute centres on coal imports by Trident Chemphar Ltd. for the 900 MW Norochcholai Power Station, also known as the Lakvijaya Coal Power Plant, Sri Lanka’s main base-load electricity generation facility.
Authorities allege that the supplier imported substandard coal from South Africa while relying on test certificates issued by an Indonesian laboratory whose accreditation had reportedly expired.
The Government had previously disclosed that it had withheld more than $37 million from coal suppliers while investigations into the shipments continued. According to Ilyas, authorities retained $22 million in fines alongside $15 million from supplier performance bonds.
“As of today, we have withheld $22 million as fines. In addition, we are holding $15 million from the performance bond. In total, over $37 million is being retained by us,” he said.
Meanwhile, Energy Minister Anura Karunathilaka said the Government would not pay any demurrage charges linked to delays in unloading coal shipments.
“All the shipments we ordered have arrived. There is an issue of delay. A total of 19 shipments are from the term contract and five are from emergency purchasing,” Karunathilaka said.
He added that some shipments expected by April arrived only recently, partly due to rough sea conditions that delayed unloading operations.
“The shipments can stay for a longer time for unloading, but we do not have to pay any demurrage,” Karunathilaka noted.
The developments mark an escalation in Sri Lanka’s scrutiny of coal procurement practices, with authorities pursuing penalties, withholding payments and challenging shipment quality as investigations continue.
