By Roy Denish.
COPE exposes the CEB coal procurement scandal, revealing weak oversight, low-grade coal, tariff pressure and losses near Rs.7 billion.
The CEB coal procurement scandal has exposed a pattern of financial mismanagement, weak oversight, and public-sector exploitation inside the Ceylon Electricity Board.
The Committee on Public Enterprises has revealed how Sri Lanka’s electricity provider moved away from disciplined public utility management. Instead, the board allegedly violated state procurement guidelines, bypassed oversight, and routed public resources through private subsidiaries and intermediaries.
COPE findings point to an accumulated institutional loss of 594 billion rupees between 2013 and 2024. Much of that loss, according to the findings, came from the deliberate diversion of high-value assets and funds to affiliated private entities, including Lanka Transformers Limited.
Within this wider breakdown, board officials and institutional arms also misallocated another 5.94 billion rupees in public funds. That money should have strengthened national energy infrastructure. Instead, it deepened a system weakened by poor governance.
The crisis worsened when the CEB abandoned its own Long-Term Generation Plan. As a result, it created artificial energy shortages and opened the door to high-cost, non-competitive emergency thermal power purchases from private independent producers. Those decisions then helped justify major tariff hikes, which the public had to absorb.
CEB Coal Procurement Scandal Exposes Accounting Failures
The financial distortion remains difficult for state auditors to track. COPE highlighted manipulative internal accounting techniques that used standardized cost methods instead of actual expenditure.
Those methods created a deceptive 15.89 billion rupee material price variance and a 3.16 billion rupee overhead rate variance. This was recorded against an unfavorable stores price variance of 5.59 billion rupees.
The board also failed to review the useful life of 214.8 billion rupees in fully depreciated but still functioning fixed assets. These included critical power plants and transmission lines. As a result, national depreciation records and capital replacement schedules became seriously distorted.
However, the clearest example of this administrative collapse emerged at the Lakvijaya Coal Power Plant in Norochcholai. The Auditor General exposed the coal supply operation as a major failure of state oversight and quality control.
Tender Rules Relaxed for Unqualified Intermediaries
The Lanka Coal Company allegedly manipulated tender rules by relaxing standard guidelines for unregistered and unqualified intermediaries. This allowed Trident Chemphar Limited to bypass mandatory registration deadlines and secure high-value supply contracts over legitimate bidders.
After the contracts went through, the quality assurance process also collapsed. Lanka Coal Company accepted twelve consecutive shipments certified by an Indonesian loading-port laboratory, even though that laboratory’s operating licence had already been cancelled.
The unaccredited reports claimed the coal met optimal standards, with energy levels above 5,900 kcal/kg. Yet secondary testing after the coal reached Sri Lanka showed actual calorific values falling as low as 5,520 kcal/kg.
That difference should have triggered alternative verification and halt systems. Instead, the state company ignored the discrepancy and continued the process.
Norochcholai Plant Hit by Low-Grade Coal Fallout
The logistical failure grew worse when officials failed to import coal for 40 days during the crucial November and December weather window. That created an artificial fuel shortage and forced an emergency spot tender.
The selected supplier had a three-year record of failing to deliver the specified calorific grades. The consequences were immediate.
Because the plant burned inferior, impurity-laden coal, it had to increase consumption from the standard 107 metric tons per hour to 120 metric tons per hour. That was necessary just to maintain a basic 300-megawatt output. In effect, the plant wasted an additional 13 tons of coal every hour.
High moisture and chemical impurities clogged coal mills, blocked air preheaters, created fire hazards, and forced engineers to cut generation capacity to 270 megawatts. At the same time, the plant had to burn costly auxiliary oil to stabilize the grid.
Losses Near 7 Billion Rupees as Public Pays the Price
The direct waste from overconsuming low-grade fuel across nine shipments cost the state 2.237 billion rupees. Meanwhile, the resulting power deficit forced the national grid to buy another 114.5 million kilowatt-hours from private thermal diesel plants.
Together, these failures pushed estimated scandal losses to nearly 7 billion rupees.
The exposure eventually forced the resignation of the Energy Minister. It also triggered the appointment of a Supreme Court-led Presidential Commission to investigate the historic footprint of the Lanka Coal Company.
The commission must also pursue 2.332 billion rupees in penalties from defaulting suppliers. The scandal now stands as a stark warning. Entrenched corruption and weak governance in Sri Lanka’s energy sector continue to sabotage economic recovery while ordinary consumers carry the cost.
