Washery tenders delayed, clean coal plan in soup: Here're the details

India’s plan to have cleaner coal has been delayed much beyond the deadline.

Of the 18 coal washeries planned by Coal India for both coking (for power plants) and non-coking (for steel plants), only one in each category has come up even after a decade of launching tenders for them.

Clean coal is one of the targets under internally defined contributions, which countries committed at the Paris Climate Change conference, and imperative to the country’s plans to reduce coal imports. 

Coal washing improves the quality by reducing the ash content to 33 per cent from the earlier 40-45 in average coal in India.

Private-sector players that bid for these tenders are complaining that Coal India has been altering tender specifications and thereby cancelling projects. 

A coal washery tender to come up at the Kusmunda coal mine in Chhattisgarh has been open since 2010. While a joint venture of ACB-Adani was selected as the washery operator, Coal India is now planning to cancel the tender. 

Industry sources said Coal India was to provide land on lease to the private player but it was unsuccessful. “Now CIL is saying they need special approval for leasing the land. So now it is planning to cancel the tender,” said a senior industry executive. 

In another tender for the Baroud coal mine, also in Chhattisgarh, a similar thing happened. The tender was open since 2015 and ACB was the lowest bidder. 

The executive further said Coal India was now planning to alter the projects to be on the “build, operate, maintain” model, where initial investment would be done by Coal India. Earlier it was the “build, own, operate” model, where the private company invests in the initial set-up of the washery.

In its response, Coal India agreed there were issues cropping up in setting up new washeries. Spokesperson of Coal India confirmed BOM is being considered instead of BOO. “Land acquisition and possession are bottlenecks. Response from private sector was lukewarm for investing in washeries on BOO concept,” he said.

Industry Executives, however, said private participation is limited in the BOM model as the bank guarantee is same as the investment needed in the washery. In BOO, the bank guarantee is 10 per cent of the investment. A 10 million tonne coal washing facility needs an investment to the tune of Rs 300-500 crore.

“For the recently tenders under the BOO model by SECL participation was more compared to the BOM and also the rates quoted were also cheaper,” said an executive.

In an emailed reply, the CIL spokesperson said the Dahibari coking coal washery of BCCL has been commissioned in August last year. Two more coking coal washeries, also in BCCL, are expected to be operational in 2019-20 while two others are anticipated to be ready for commissioning in 2020-21 and 2021-22, respectively.

Of the planned non-coking coal washeries, one washery, in MCL is under construction and is expected to be completed by September 2020. The others are in various stages of planning and tendering. It is anticipated that most of these washeries will be completed between 2021-22 and 2022-23 and 2023-24, Coal India said in their reply to the paper.

The company in its annual report for 2018-19 stated it CIL is operating 16 washeries with a total coal capacity of 36.80 million tonne per year (MTY). 

The total washed coal production from these existing washeries for the year 2018-19 has been about 13 MTY. Coal India’s total coal production was 600 million tonne during the year.

Of the planned non-coking coal washeries, one washery, in MCL is under construction and is expected to be completed by September 2020. 

The others are in various stages of planning and tendering. It is anticipated that most of these washeries will be completed between 2021-22 and 2022-23 and 2023-24, Coal India said in their reply to the paper.