Maharashtra Power Generation Company Ltd’s (Mahagenco) extension of a coal washing contract to the existing washery for the Chandrapur Thermal Power Station has raised eyebrows. The contract was already shrouded in controversy as other washeries had alleged that Mahagenco was losing Rs 70 crore per annum due to this contract.

Mahagenco had given a coal washing contract in November 2006 to Gupta Coal Washery (GCW), which expired in March 2008. Mahagenco has extended the term of the contract by six months without inviting any fresh tender. When contacted, Mahagenco executive director Chandrakant S Thotwe was not available for comments.

In the coal washing business, the yield (washed coal given back to the consumer, Mahagenco in this case, by a washery operator) is significant. It is measured in percentage. In this contract, Mahagenco agreed that for every 1 per cent of reduction in ash content, Mahagenco would get back 2.5 per cent less quantity of coal, ie yield reduction is 2.5 per cent. This is an industry norm. But in this case the yield reduction was 4.5 per cent, which means leaving a huge quantity of coal with the washery operator.

Normally, raw coal having ash content of more than 34 per cent is required to be washed as per the notification issued by the Ministry of Environment and Forests. In this case, raw coal supplied to the washery operator by Western Coal Field Ltd (WCL) on behalf of Mahagenco had on an average 32 per cent ash content. Therefore, it was not necessary to be washed. But for environmental concerns if it was to be washed, then Mahagenco must have looked into the yield percentage given by the washery operator.

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