The Ceylon Electricity Board has incurred a direct financial loss exceeding Rs. 2,796 million after burning substandard coal that failed to comply with the technical design requirements of its power plants, according to a recent internal report. The findings, based on assessments of four imported coal consignments, highlight serious operational and economic consequences for the country’s energy sector in Sri Lanka.
The report, submitted by the Board’s General Manager, details the losses attributed to each shipment. The first consignment resulted in a loss of Rs. 595.1 million, followed by Rs. 288.5 million from the second. The third shipment caused the highest loss at Rs. 1,047.4 million, while the fourth accounted for Rs. 865.0 million. These figures were calculated by estimating the cost of electricity that could not be generated due to defects in the coal, with a unit value set at Rs. 57.53.
Although penalties have been imposed on suppliers, the fines—totalling approximately Rs. 1,037 million—cover only part of the financial damage. Authorities plan to recover Rs. 644.5 million for the first shipment, Rs. 135.1 million for the second, and Rs. 150.3 million and Rs. 107.1 million for the third and fourth consignments respectively.
Beyond lost generation, the Electricity Board has warned of significant technical impacts caused by the poor-quality fuel. Blockages in the Air Pre-Heater system alone are estimated to require Rs. 50 million in cleaning costs. Damage to boiler pipe systems is expected to demand at least Rs. 10 million in maintenance, while corrective work related to overheating turbine blades may exceed Rs. 100 million, raising concerns about long-term reliability and safety of the generating units.
The report states that preparations are underway for a comprehensive scientific study to assess the broader effects of using substandard coal on the power system. The matter has also been presented to the Parliamentary Sectoral Oversight Committee, with legal clarifications sought regarding the contractual conditions required to cancel existing coal supply agreements.
Energy analysts say the episode underscores vulnerabilities in procurement oversight and quality assurance, issues that could have lasting implications for electricity costs, infrastructure durability, and public confidence in the management of the national power sector.
