Former Coal India chairman Partha S Bhattacharyya has asked the Centre to withdraw a proposal to do away with mandatory coal washing as it would be a "retrograde" step.
He flagged that the inability of the PSU to implement its promise of supplying washed coal has led to the erosion of around Rs 1.25 lakh crore in market valuation in 10 years to 2019-20.
The Centre is planning to do away with the mandatory requirement of washing of coal before it is transported to thermal power stations.
In 2014, as part of its climate change commitments, the government had made coal washing mandatory for supply to all thermal units beyond 500 km from the coal mine.
This was done in line with the country's stand in climate change negotiations - not to reduce coal consumption and rather focus on emission control.
"The government is considering a proposal to do away with earlier restrictions of coal washing for dry fuel moving by 500 km or more or for the fuel consumed in and around any city," Bhattacharyya said.
"The proposal to withdraw the mandate for coal washing, mooted at MOEF&CC, is in my considered opinion, a very 'retrograde step'. Considering India's need to depend on coal-based thermal generation for a few more decades, it is felt that the existing mandate for coal washing, instead of being withdrawn should be enforced rigorously in letter and spirit," the former chairman and managing director said in a letter to C K Mishra, Secretary, Ministry of Environment, Forest and Climate Change.
Washing coal increases the efficiency and quality of the dry fuel, therefore increasing its price.
He further said that "for various reasons, the washery construction programme (of CIL to phase away supply of unwashed coal over a period of time) lost steam...till the MOEF&CC notified restriction of ash to 34 per cent for coal consumed by consumers at distances in excess of 500 km or in the vicinity of large cities."
The criteria could be fulfilled either by blending with low ash imported coal or by washing domestic coal.
On accounts of delays in setting up of washeries by CIL, blending with imported coal became the sought after option resulting in the rise of import of thermal coal substantially.
This perhaps explains, partly if not wholly, the rise in relatively expensive import of thermal coal for non-coastal consumers to over 120 million tonnes per annum entailing forex outgo of USD 8-9 billion, while CIL struggles with unmanageable accretion of coal stock even though the coal production is way below target.
The replacement of imported thermal coal by domestic coal will not only allow CIL to produce more coal but will also increase demand for domestic coal whereby, reduce dependence on imported coal substantially.
This will eventually also enable the government to carry out the auction of coal blocks successfully.
However, to remain consistent with climate change commitments, the coal must be largely washed to reduce ash below 34 per cent.
In other words, pursuing this strategy will require intensifying efforts in setting up coal washing capacity at the earliest, on a large scale.
Coal India accounts for over 80 per cent of domestic coal output.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)