Evidence before the Presidential Commission says critical coal specifications were altered between tender and contract – leaving Sri Lanka with US$1.575 million in excess payments
Sometimes the most expensive mistakes in government are hidden inside the smallest changes.
Evidence now before the Presidential Commission of Inquiry into coal procurement says Sri Lanka incurred excess payments totalling US$1,575,630 through procurement arrangements for coal supplied to the Lakvijaya Power Plant at Norochcholai during 2015 and 2016.
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The figures alone are serious. The way the alleged loss occurred deserves considerably greater attention.
The transaction involved Liberty Commodities, selected through an emergency procurement process to supply 165,000 metric tonnes of coal. The contract was signed in August 2015.
The bidding documents contained a price-adjustment formula governing the sulphur and ash content of the coal. These specifications mattered because coal falling outside agreed quality standards could attract financial adjustments or surcharges protecting the purchaser – ultimately the Sri Lankan taxpayer.
But according to evidence placed before the Commission, important figures appearing in the bidding documents were changed when the final agreement was executed.
The sulphur percentage threshold stated as 0.1 per cent in the bidding documents became 1 per cent in the final agreement.
The ash percentage stated as 1 per cent became 10 per cent.
Those are not cosmetic alterations.
They potentially change the financial consequences when coal fails to meet the quality specifications upon which suppliers competed for the contract.
There was another issue. Tender documentation had contained specifications concerning the size and weight of coal particles, but the final Quality Price Adjustment provisions reportedly treated size as not applicable.
Evidence before the Commission indicates these changes were made without Cabinet approval.
The financial consequences did not apparently end with the original procurement because the altered conditions were subsequently applied to further spot purchases.
The excess payments identified were US$173,134 on the first procurement, US$391,192 on the second and US$1,011,304 on the fourth.
Together they total US$1,575,630.
There is potentially another layer to the loss. Had certain quality criteria remained applicable, Sri Lanka could reportedly have recovered substantial additional surcharges from the supplier.
This is why the investigation cannot stop with the headline number.
Someone prepared the tender conditions. Someone evaluated the bids. Someone prepared or reviewed the agreement. Someone accepted the changes. Someone signed the documentation and someone allowed altered contractual conditions to influence subsequent purchases.
The relevant period is now more than a decade ago, and evidence before a Commission must not be confused with a final determination of individual wrongdoing. Those who participated in the process are entitled to explain what happened and why.
But institutional responsibility does not disappear with time.
Sri Lanka’s history of procurement controversies frequently follows a familiar pattern. Large numbers are announced, inquiries begin, officials give evidence and public attention eventually moves elsewhere.
Coal is particularly unforgiving because the country cannot simply choose not to buy it. Lakvijaya remains central to electricity generation, meaning enormous quantities must continue to be procured and enormous amounts of public money will continue to change hands.
Indeed, Sri Lanka is again procuring millions of tonnes for the current coal season.
That makes what happened in 2015 and 2016 relevant today.
The central question is no longer merely how Sri Lanka allegedly lost US$1.57 million.
It is whether the system that permitted tender conditions to change between bidding and contract has itself changed since then.
