Presidential commission hears of US$1.57 million loss in 2015-16 coal purchases

The State incurred a loss of more than US$1.57 million in coal purchases for the Norochcholai Lakvijaya Power Plant during 2015-2016, according to evidence presented before the Special Presidential Commission of Inquiry investigating alleged fraud and corruption in coal transactions and power generation.

Former Power and Renewable Energy Ministry Additional Secretary D. Amaratunga told the Commission that the loss arose after changes were made to the terms of an agreement between Lanka Coal Company and Liberty Commodities.

He said the formula used to calculate penalties when coal failed to meet required technical standards had been altered from the version set out in the original tender document.

According to Amaratunga, the changes favoured the supplier and reduced the penalties that could be imposed for deficiencies in coal quality.

He said the tender draft specified a 0.1 per cent threshold for price deductions relating to sulphur content, but this was changed to 10 per cent in the final agreement. A similar change was made to provisions covering ash content.

Amaratunga said the changes removed an important safeguard for the Government and resulted in excess payments of US$1,575,630 to Liberty Commodities over three emergency coal purchases during 2015-2016.

At the time, President’s Counsel Maithri Gunaratne served as Chairman of Lanka Coal Company.