By Namini Wijedasa
A third coal shipment from South Africa—bought via the Indian supplier Trident Chemphar—has failed quality testing by the independent accredited laboratory Cotecna, officials said this week.
Trident has now been charged penalties totalling US$8.1mn for three shipments out of the 12 that have been unloaded at Norochcholai, officials from Lanka Coal Company (Pvt) Ltd (LCC) said. Its contract, however, has not been terminated—neither for selling off-specification coal nor for consistently delaying supplies.
Four shipments short?
LCC ordered 25 shipments of coal (1.5mn metric tonnes) from Trident for the 2025-2026 season. Delivery was scheduled to have been completed by April 23 this year. However, Trident is only now unloading its 13th shipment, when it should have been the 19th.
Meanwhile, none of Trident’s coal shipments has enabled the Lakvijaya coal power plant (LVP) to reach its optimal 900MW capacity. Of the 810MW usually channelled to the grid (the rest is used to power auxiliaries such as pumps and fans), generation routinely falls 135MW to 185MW short.
LVP’s internal laboratory continues to record gross calorific values below and ash content well above required specifications. A site visit by the regulator Public Utilities Commission of Sri Lanka (PUCSL) also evidenced that the plant underperformed when fed with Trident coal.
However, Lanka Coal did not terminate the Trident contract, saying tests carried out by Cotecna—the lab hired by LCC and LVP—on coal samples collected at Norochcholai contradicted a majority of the LVP unaccredited laboratory’s findings. But Cotecna did find three shipments to be off-specification. These are the first, ninth and twelfth consignments.
Although LCC did not end the contract, it then floated “an emergency tender” for 300,000MT of coal for the same season. It was a tacit admission that Trident’s supplies were unacceptable and needed replacement with “better” coal.
Interestingly, Trident also bid for the emergency tender, quoting the lowest.
But the company sent a letter on the same day, citing a miscalculation and raising its price. This makes Trident liable to lose its performance bond as the terms of the tender say—among other applicable grounds—that a bid security may be forfeited if a bidder “withdraws its Bid during the period of Bid Validity specified in Clause 1.10.8”.
Trident was “disqualified” from the bid and another Indian company, Taranjot, won the emergency tender. Taranjot’s five shipments are due from April 20 to May 10 this year.
By then, Trident would have supplied around 18 of its contracted 25 shipments. At this rate, it is calculated that there could be a shortage of three to four shipments for the ongoing season.
“Four shipments amount to 225,000MT,” an official source said. “That is a month’s requirement of coal for LVP, short.” Official sources said, however, that LCC is trying to push unloading beyond early May—after which monsoons usually make it difficult and dangerous—to early June.
This belies a sense of desperation amidst a global fuel crunch that has made diesel expensive and scarce, and furnace oil hard to come by. Both are alternatives to coal that are used to fire power plants during times of high demand. With insufficient coal, and not enough electricity produced from the coal that’s available, costs will skyrocket.
Whose interests come first?
This week, comments by Transport Minister Bimal Ratnayake about the controversial procurement provided insight into why it was not cancelled, despite glaring violations. He maintained that the coal tender was carried out properly. He admitted that laboratory tests have proved that the generation of electricity from the coal was low. For this, the company has paid—he said—a massive fine of about US$ 2mn, or Rs. 600mn rupees.
But, Minister Ratnayake hastened, there is “another side to this.” “Even if we assume this is bad coal, do we have bargaining power? If the bread from one shop isn’t good, we can return it and buy from another shop. Now, let’s say this is the worst of the worst coal. What alternative do we have?”
“You can’t just get coal from this or that shop,” he continued. “You have to order it months in advance. It has to be brought and stored. So, what is the real problem? One is that the electricity generated from this coal is low. That’s not the government’s fault. It’s a natural occurrence that happened during importation, it’s the company’s fault, and they paid the fine.”
“The problem is that, because of these unlimited fines, if by chance the company says, ‘I’m bankrupt, there is nothing I can do’, we might be able to sue them and recover the fine later, but where do we get coal from then?” he then said. “We will have no coal.”
This has raised concerns in power and energy circles about whose interests the government is protecting.
Clear basis for termination
To begin with, the contract has clear bases for termination. Section 3.11 states that: “In the event any two different shipments of coal quality parameters are reported outside the absolute minimum/maximum tolerance limit after testing of coal samples at Load Port and Jetty of the Plant…then LCC may terminate the contract agreement.”
“Further, LCC reserve the right to terminate the contract, if there are any significant deviations of quality parameters reported frequently between Jetty of the Plant and Load port Test reports and after verified [sic] by testing of the relevant Reference Samples.”
Another clause says: “In the event that the delays occurred in more than two (2) occasions (shipments) exceeding seven (07) days, the Buyer reserves the right to terminate the Agreement, considering it as Seller’s Default under provisions of the Clause 3.11.”
Finally, 3.10.1 related to “Seller Event of Default” provides grounds for termination if either the quality of 25 percent or more of the coal delivered or tendered for delivery over a three-month period or, coal delivered or tendered for delivery by two consecutive shipments, is within the LCC reject values for coal set fort in Clause 5.2 of the schedules.
Trident received LCC registration, along with several others, on August 13, 2025, just five days before the 1.5mn MT 2025-2026 tender was published. The company quoted the lowest price, US$98.50 per MT. It won the bid.
Now it transpires that Trident will provide at least 18 shipments of off-
specification cargo at a low price, but that the government has also been forced to buy five additional shipments of better-quality coal through an emergency tender at US$ 142 per MT. The loss is considerable. And so far, the only losers have been the national coffers, the rate-paying public, and LVP.
The fact that Trident continues to provide coal despite a US$ 8.1mn penalty indicates that its margins are likely worth this gentle “slap on the wrist”.
Courtesy:Sunday Times