Centre To Direct Cil To Set Up Washeries For Hinduja Unit

The directive becomes necessary in view of a resolution against setting up of washeries adopted by the CIL board on September 14. The board was of the view that CIL should concentrate on its core business of producing coal from mines rather than setting up and running coal washeries where risks are not commensurate with returns.

Though the government order would cite public interest as the main reason for CIL to enter the washeries business, official sources say the first direct beneficiary of the move will be Hindujas who are setting up a coal-fired 1,040 mw power project in Vishakapatnam. For this, the Hindujas have already entered in to an agreement with Mahanadi Coalfields, a CIL subsidiary, for supply of 4.8 million tonnes of coal per year. The directive to reverse CIL's decision has come from the highest levels in the government.

 

The directive would mean the government has ignored the techno-economic considerations in setting up the washeries. The fuel supply agreement proposed for the power plant envisages that in the event of non-supply of coal by the CIL subsidiary, the demurrage will be as high as Rs 3,000 a tonne. Given the high rate of breakdown of washeries, this implies that CIL will be liable to pay heavy damages to Hindujas in case of disruption in supplies.