Low Quality Coal Was Supplied

By Faraz Shauketaly

Week in and week out The Sunday Leader reported on the controversial supply of coal for the Norochcholai power plant. Our articles were ignored, were the butt end of criticism for being ‘partial’and officials appeared to all but ignore these very serious matters. We brought it to the attention of anyone who was involved – the Ministry Secretary, the Directors of Lanka Coal and of course the Ceylon Shipping Corporation.

We warned that the country faced a phenomenal loss which our Treasury could ill afford. All this we urge you to bear in mind, happened in our edition of November 19, 2012 – nearly two years ago.

Thus, two years almost to the day since we first warned of a potential fraud in the making, it has now come to light that ‘there WAS a fraud and that the CID are investigating matters. Minister of Power, Pavithra Winniarachchi stated that this happened under ‘her predecessor’s watch.

They now claim that acting on the information revealed by ‘Shauketaly’s articles’ they even wrote to the High Commission in Indonesia asking them to verify and report back on the supplier. Yet it is claimed that there was only a ‘small discrepancy’ in the under spec coal that was on board the vessel headed for Sri Lanka. In our book, there was a reason for the specification – clearly it was not rocket science to work out that the coal had to match the plant’s capabilities if the plant was to achieve its potential (at the time) of 300 MW. We are told that due to some other glitch the plant was capable of just 285 MW – ‘only a little difference’ for the coal. The indifference of those with responsibility and accountability to these matters is shocking.

The bottom line is that the republic of Sri Lanka lost out. How many months of housemaids’ salaries from Saudi Arabia will be required to make up this loss? Who are these merchants of misery who make money by delving into the world of fraud? Do we need an election to highlight these matters? – If so we would welcome an election every week.

A Fraud In the Making at Lanka Coal (As reported in 2012)

Sensational new evidence has been unearthed by The Sunday Leader showing that the latest shipments of coal from Indonesia carry questionable Sampling and Analysis Certificates. In a new twist to the story, it has been revealed that an Indian Court has been told that Geo Chem – the company supplying one of the test certificates at the loading Port – “were in the habit of issuing forged Certificates and that the Directors of Geo Chem were aware.” Justice T. P. Sharma turned down an application for anticipatory bail from two directors of Geo Chem, Rajesh and Neel Bahal.

The 2nd shipment of questionable coal to be shipped to Sri Lanka is also from Indonesia and 55,111 Metric Tonnes of Indonesian Steam Coal in bulk was shipped on board MV Mokara Colossus and arrived earlier this week. Once more the Certificate of Sampling and Analysis shows that the results are far from acceptable for the stated requirements of Lanka Coal and the Ceylon Electricity Board. The total moisture content was 18.5%, the Sulfur content was borderline at 0.99 but the all important ‘Gross Calorific Value’ was found to be 5,603 Kcal/Kg. The stated requirement for Sri Lanka’s lone coal power plant is 6,000 Kcal/Kg.

The choice of Geo Chem to carry out the Sampling and Analysis certification is puzzling at the very least and questionable at best –especially due to the existence of a Certificate from Sucofindo of Indonesia. Clearly the coal that is produced from this particular mine simply does not produce the higher specification coal – which incidentally also costs more – at least US$ 30 per tonne more. The difference in value is a cool US$ 1.6 Million.

Lanka Coal appears to have had appalling disregard for due diligence, something which they ought to have carried out especially in light of the fact that Lanka Coal is not the personal fiefdom of Tissa Herath, the Ministry of Power and Energy or indeed any other individual. Lanka Coal is a company owned entirely by the Treasury in essence by the people of Sri Lanka.

Tissa Herath, Chairman of Lanka Coal at the time may be aware that Article 28(D) of the Constitution requires all those in Sri Lanka to ensure that State Resources are not squandered in any manner. A source from within the Norochcholai Power station said, “It is a very shoddy performance by Lanka Coal. They have not cared about the country. They get all the benefits from the government because they have helped it politically but when in office they spend their time letting the people of the country down. It is unfair, it is unethical and I say they must be investigated.”

Last week Tissa Herath played it cool but answered his mobile. This week his mobile was more switched off than on and when it did ring, he did not answer. The e-mail sent to him went unanswered. The Ministry however did say that an answer complete with details would be sent in response to our e-mail to them and we expect to carry that response in our next edition.

The burning question is how on consignment number one to which we devoted our article last week, two very differing sets of results have been found. Whilst there are variances to be expected the degree of variance as per the 2 certificates beggars belief. We carry images of the Geo Chem Certificate which shows quite a difference from that of Sucofindo. Last week Tissa Herath said ‘the award of this contract was given to another state organisation – Ceylon Shipping Corporation’. Perhaps what Herath meant to say was that the transportation element was awarded to Ceylon Shipping Corporation. According to Chairman Ceylon Shipping Corporation (CSCL) Kanchana Ratwatte, “the consignments you refer to are on a CIF basis. Therefore CSCL is not even involved with the freight” (on these two shipments).

Other sources however begged to differ. The claim doing the rounds is that because of the huge losses Lanka Coal would have incurred had the last shipment from Noble been sold off as distress cargo (because bad weather prevented the unloading) Lanka Coal, Ceylon Shipping Corporation and others would have faced immense financial pressure and placed their reputations on the line, had the matter gone to Court.

An un-named agent thought to be a major player in the power sector with a history of involvement in power generation including emergency power and a sidekick better known to collect funds purportedly to fund political activity had together brokered a deal by which the near-distressed cargo would be taken off Lanka Coal and that the shipments would be replaced in exchange for the right to deliver 5 shipments totaling 300,000 MT. It is claimed but not verified that at the price they are supplying coal to Lanka Coal for that specific grade, a long queue of buyers from around the world would be flocking to their offices. faraz@thesundayleader.lk

E-mail Sent To Chairman  Lanka Coal, Tissa Herath:

Why are there 2 certificates of Sampling & Analysis at the port of loading?

Can you explain the difference  between the certificate in your possession and which you read out  to me on the phone in terms of the  Gross Calorific Value?

The acceptable level for Coal into  Sri Lanka was set at 6,000 Kcal/Kg. The Certificate from Sucofindo, commissioned by the suppliers of the coal and their partners, shows a figure less than that, in which case why was the consignment shipped to Colombo – given that there was some anomaly between Geo Chem and Sucofindo certificates.

Are you aware of the issues  being faced by Geo Chem and two of their officials, both of whom were  refused anticipatory bail by an Indian judge in proceedings in India that  related to questionable certification issues? At one time the services of  Geo Chem was halted by Mahagenco in India, after credible allegations  surfaced on the veracity of their certification.

Did Lanka Coal have any input in the choice of the Sampling and  Analysis Company? If Lanka Coal did have any input was any due  diligence carried out on Geo Chem?