The Hon. Arkam Ilyas - Deputy Minister of Power

¶ 01 Hon. Presiding Member, thank you for the opportunity.

¶ 02 I first thank Hon. S. M. Marikkar, who brought this motion, and Hon. Ajith P. Perera, who seconded it. It gives our Government side a chance to present the true story on the 2025–2026 coal tender to the country and the people.

¶ 03 From what the Opposition has stated, I must start by correcting their errors. Those who ruled under “good governance” from 2015 for five years—including those now here as Deputy Ministers—do not seem to know the country’s coal requirement. They claimed the country needs 12.32 million tons—completely wrong. This year’s requirement is 2.258 million tons. From the previous tender, about 0.6 million tons remained. This year we ordered 1.58 million tons. Even their own first page documents reveal these numbers if read properly. They began with a wrong premise.

¶ 04 They allege the selected company lacks financial strength, experience, quality assurance, and adequate performance bonds. That too is wrong. This was not an open tender; it was a closed international tender. Before calling, we pre-registered suppliers who meet our specifications—quality, financial strength, supply capacity. Only those registered could bid.

¶ 05 On the claim that we ignored the Auditor General’s and COPF’s advice: COPF’s basis was the Auditor General’s report of 30.09.2022. Clause 7.2 called for relaxing certain conditions in a lawful manner to increase competition. This stemmed from the earlier three-year tender proposal to buy coal at USD 324 per metric ton—a huge price. We changed that approach. This year we purchased at USD 98 per metric ton, saving massively. Had that 3-year tender gone through, we would still be paying USD 324 today.

¶ 06 Hon. Harsha de Silva chaired the committee and recommended implementing the Auditor General’s recommendations as they are. We followed those recommendations in the 2023 tender. For 2025–2026, we changed nothing from 2023; no Auditor General or COPF report has since contradicted this. The Opposition distorts facts to frighten the public.

¶ 07 On past practice: over the last 15 years, many coal tenders were handled with issues. In 2014, seven vessels with GCV below 5,900 were rejected; we could claim from only four, and even then recovered only small amounts—mere hundreds of thousands of dollars. Today we impose penalties of several million dollars. Another example: from September 2015 to April, voyages numbered 79 to 114. Due to a calculation error in liquidated damages—not for any other reason—the then State/Dy. Minister caused a loss of USD 1.575 million to the CEB. Cases are still ongoing; the money has not been recovered. If recovered, tariffs could have been reduced by at least a cent. I table the relevant document. Even now, cases like those against Liberty Commodities are pending. If recovered, we could reduce tariffs further.

¶ 08 We do not justify low-quality coal. If the supplier fails to meet our standards, they are liable. We do not stand for any company. If wrongdoing occurs, we will act.

¶ 09 Variations can occur due to climatic and geographic factors at source countries. From 2011 to 2021, penalties were levied in many years: around USD 5.6 million in 2020–2021; around USD 8 million in 2021–2022. This is not new. Claims of impending nationwide blackouts in April or September are fear-mongering.

¶ 10 On 2025–2026 procurement: our Government has done nothing wrong. We followed 2023 specifications entirely. The only change the Opposition cites is that the international tender remained open for 21 days rather than 42. That 21-day period had full approval of the National Procurement Commission/Committee, and upon registered suppliers’ requests we extended by another seven days. A record number—eleven—participated. The appeal period remained 14 days. No appeals or court cases were filed. That shows we proceeded 100% correctly.

¶ 11 They also claim that in their time they cut Rs. 1,000 million from a tender. In fact, for 2024–2025 a company had won the tender properly. Then an unqualified party—without three years in business, lacking prequalification—came offering a lower price than the awarded bid. The tender committee rightly rejected it as illegal. However, Cabinet overruled and awarded at that lower figure. This sets a terrible precedent, eroding international investor confidence. The original winner was a top-ten global company. Such actions deter reputable firms from bidding here, thinking tenders go to cronies. We have reversed that reputation by awarding to the legitimate winner.

¶ 12 On alleged losses at Lakvijaya (Norochcholai): last year’s coal cost was about USD 120/ton; this year we purchased at USD 98/ton, saving roughly Rs. 10.5 billion (about Rs. 1,050 crores). Regarding standards: the primary standard is the Load Port calorific value; we also check Discharge Port values and plant performance. Penalties or rejections are determined by combining both. Lakvijaya has a bomb calorimeter; sometimes internal readings are used to suggest losses. We compared: in the previous supplier’s 11 shipments, four fell below 5,900; significant penalties should have been applied—around Rs. 1,000 million—but were not. The decisive factors are Discharge Port results and plant performance. If Discharge Port results pass within limits, we accept; nonetheless, we have identified an issue: plant performance appears reduced. We spoke to plant officials. Our concern is whether Load/Discharge reports have been manipulated. The Discharge Port testing firm is the same entity associated with the 2023 tender. Therefore, we have appointed a special expert committee through the Ministry—including university academics—to investigate whether any report manipulation occurred or whether the plant itself has issues. If wrongdoing is found, we will impose penalties; if serious, we will refer to the CID and ensure punishment.

¶ 13 On tariffs: the CEB has made a request to PUCSL to increase tariffs by 13.56%. I have the report. This is not due to the coal issue. The CEB makes quarterly projections and seeks adjustments accordingly. After our Government assumed office, we first told CEB not to increase by 5%; PUCSL then directed a 20% reduction, which we implemented. Later CEB requested an 18% increase; PUCSL allowed 15%; we increased by 15%. In the last quarter, CEB sought an 11.9% increase; PUCSL directed a 6% reduction; we kept it to the dot. This time too, PUCSL’s report will come by end-March; we expect no major change. Do not create undue fear; we have no desire to raise tariffs arbitrarily.

¶ 14 We promised to reduce electricity bills by one-third. That requires a method: moving to cost-reflective tariffs while reducing generation cost. Propping up the CEB with Treasury funds only cycles debt back to the people. Our plan is to cut generation costs—our sectoral spend is about USD 5 billion, of which USD 4 billion is for generation (about 80%). We aim to reduce that 80%. We can procure wind power at less than Rs. 12 where others paid Rs. 24. Battery Energy Storage System tenders—previously absent in Sri Lanka—can be done around Rs. 17. Solar, previously at Rs. 37 per kWh, we have brought to around Rs. 27 under 20-year PPAs; we are working to reduce to around Rs. 17. Projects we have initiated will, within 2–3 years, cut generation costs by about 30%—one-third. As the Ministry and Government, we are committed to this. The public need not harbor undue fears. We will deliver substantial positive change.

¶ 15 Thank you.