By Vishvanath

Sri Lanka is battling the traditional New Year blues and limping back to normalcy after the Avurudu holidays merrymaking. The government may have timed the parliamentary debate on the Opposition’s no-faith motion against Energy Minister Kumara Jayakody over the coal procurement scandal, for April 12, in the hope that its political fallout would fizzle out during the New Year festival. But the issue will not go away; it is bound to resurface shortly. The government will be mistaken if it thinks the defeat of the no-faith motion in the parliament last Friday has helped put the matter to rest. In fact, the Opposition’s campaign against the coal scam has just begun and will gain momentum with the passage of time.

As the Treasury bond scam was to the UNP-led Yahapalana government, so is the coal scandal to the JVP-NPP administration, which made a solemn pledge to restore the rule of law and eliminate bribery and corruption. The Yahapalana regime came to power on a good governance platform, condemning its predecessor, the Mahinda Rajapkasa government, as a metaphor for corruption. However, only two months into office, following the 2015 regime change, it had a mega corruption scandal to contend with. The JVP-NPP government is facing a similar situation.

Treasury bond scam

On 27 February 2015, a 30-year Treasury bond was issued. The Central Bank of Sri Lanka initially announced a bond sale worth Rs. 1 billion, but went so far as to accept bids worth about Rs. 10 billion at higher interest rates. Perpetual Treasuries Ltd., a firm linked to the son-in-law of the then Central Bank Governor Arjuna Mahendran, appointed by the UNP to high post, obtained most of the bonds. The bond issue, tainted by insider dealing and manipulation of the auction process, caused significant losses to the state and the Employees Provident Fund (EPF) and triggered political controversy, investigations, and a presidential commission of inquiry, making it one of the biggest financial scandals in Sri Lanka’s history. The Yahapalana government never recovered from the adverse political impact of that scam, which it made a vain bid to cover up.

The JVP-NPP government was also accused of a mega scandal within the first two months of its formation. In January 2025, as many as 323 freight containers, red flagged for mandatory Customs inspections, were released via the green channel from the Colombo Port purportedly to clear a cargo backlog. What those big boxes carried is anyone’s guess. The government sought to absolve itself of responsibility by claiming that the Customs officials had released the containers. It also had a parliamentary select committee appointed to probe the allegations when public opinion turned against it. However, the coal scam is different in that the losses it has caused have sent the cost of electricity generation up, warranting huge power tariff increases.

Power tariff hikes

The low-quality of coal imports has led to a drop of about 160 MW in electricity generation at the coal-fired Norochcholai power plant, and therefore oil-fired power plants have to operate overtime to make up for the huge electricity supply shortfall. Electricity prices have already been increased and the government has asked for another power tariff hike, much to the consternation of the public. Given the diversion of diesel meant for transport and agriculture for power generation amidst protests from transporters and the family community, and the staggering cost of using diesel for power generation, the government is very likely to start imposing power cuts sooner than expected to prevent further generation cost escalations and save diesel, independent experts have warned.

The JVP-NPP government defeated a motion of no confidence, moved by the Opposition against Energy Minister Kumara Jayakody last Friday over the coal procurement scandal, which is believed to have caused a multi-billion loss to the state. That motion had no chance of passage, given the government’s two-thirds majority in the parliament, but the Opposition managed to lump the entire NPP parliamentary group, numbering 159, with Minister Jayakody, who has also been indicted of corruption by the Commission to Investigate Allegations of Bribery or Corruption.

Sugar tax scam

The SLPP government, which came to power promising to safeguard national security, also faced a scandal immediately after its formation. It did away with the import levy on sugar in favor of some of its financiers engaged in importing sugar. The then Opposition claimed the government action had cost the Treasury billions of rupees and the importers did not pass the benefit of the duty waiver to consumers and maximized their profits. Among the importers who stood to gain was a businessman who sponsored “Viyathmaga”, a think-tank supporting Rajapaksa’s development vision and the SLP’s election campaigns. Try as it might, the SLPP government could not live down the political fallout from the sugar tax scam, which was one of the issues used by the Opposition, including the JVP, and other anti-government forces to turn public opinion against that administration and fuel mass agitations.

Moral right forfeited

The JVP-NPP government has sought to obfuscate the coal issue by claiming that the coal procurement process was fraught with serious irregularities under the previous governments and all those allegations since 2009 should be probed. It has stated that a special presidential commission of inquiry (PCoI) will be appointed to conduct the investigation. Besides, the President’s Office has made a complaint to the CID, asking for a probe into all coal procurement deals since 2009. These ruses are bound to fail just like the probes by the COPE (Committee on Public Enterprises) and a PCoI into the Treasury bond scams, which proved to be the undoing of the Yahapalana government.

The JVP-NPP government will have a hard time trying to convince the public that it still has a moral right to be critical of the corrupt deals of its predecessors.