A recent audit report issued by the National Audit Office has exposed significant financial losses in Sri Lanka due to the procurement of substandard coal, raising serious concerns about oversight and economic management. According to the findings, the total loss attributed to poor-quality coal shipments amounts to nearly Rs. 224 crore, highlighting systemic inefficiencies in the country’s energy procurement process.
The report details losses incurred across multiple shipments, with each cargo contributing substantially to the overall deficit. The first shipment recorded a loss exceeding Rs. 160 million, followed by Rs. 90 million for the second. The third shipment saw losses surpass Rs. 310 million, while the fourth and fifth shipments resulted in losses of over Rs. 150 million and nearly Rs. 180 million respectively. Subsequent shipments continued the trend, with the sixth incurring nearly Rs. 300 million in losses, the seventh over Rs. 240 million, and both the eighth and tenth shipments exceeding Rs. 390 million each. These figures underscore a pattern of procurement failures with significant financial implications.
The audit further warns of operational consequences stemming from the inability to generate the full 300 megawatts of expected power from the compromised coal. As a result, the country may need to produce an additional 76,354,087 kilowatt hours of energy from alternative sources, potentially increasing costs and placing further strain on the energy sector.
Amid these revelations, economic indicators present a mixed picture. The Central Bank of Sri Lanka reported a 3.5% decline in official foreign exchange reserves, which dropped from US$ 7,270 million in February 2026 to US$ 7,019 million in March 2026. This figure includes funds obtained through a currency swap agreement with the People’s Bank of China, reflecting external support mechanisms.
However, government officials have offered a more optimistic outlook. Chaturanga Abeysinghe, Deputy Minister of Industry and Entrepreneurship Development, stated that foreign reserves have now increased to approximately US$ 7.3 billion, attributing the improvement to effective financial management. He emphasized that despite global uncertainties, the government has maintained economic stability, ensured uninterrupted energy supply, and avoided disruptions to manufacturing and daily life.
The Deputy Minister also highlighted progress in fiscal reforms, debt repayment exceeding US$ 3 billion, and continued investment inflows. He noted that transparency in investment processes has improved, with streamlined mechanisms through institutions such as the Board of Investment. Additionally, tax concessions for investors have been clarified and implemented in select sectors, aiming to attract further capital into the country.
