Penalty funds from coal controversy to offset state losses

More than 10 billion rupees is currently withheld as penalties and performance-related recoveries from suppliers involved in the substandard coal controversy, and these funds could be utilised to offset losses caused to the State.

Speaking to the media yesterday, Deputy Energy Minister Arkam Ilyas stated that 18 coal shipments have arrived so far, with sixteen shipments provided by the initial supplier and two by the second.

Around 22 million US dollars has already been withheld as penalties, which amounts to nearly six billion rupees. Furthermore, a 15 million dollar performance bond remains in place. Altogether, the withheld amount exceeds 10 billion rupees, which can be used to recover the financial hit.

The issue emerged following the alleged import of substandard coal for the 900 megawatt Norochcholai Lakvijaya Power Plant earlier this year. A report by the Public Utilities Commission noted that the low-quality coal caused operational disruptions, machinery shutdowns, and environmental concerns. The Government, including President Anura Kumara Dissanayake, acknowledged that while the tender process was followed, the supplier failed to meet the required quality standards.