HOW AND WHY COMPANY DID THIS

As per the power purchase agreement, the PSPCL has to pay the TSPL fixed charges and variable cost (coal price and transportation cost). The coal is washed to minimise the ash content by up to 25 to 30%.

“Washing cost is approximately about `900 per tonne. During the washing, about 10% gross calorific value (GCV) worth `140 per tonne is lost. In a bid to save this money, TSPL in league with PSPCL officials used coal of higher ash content, which resulted in costlier power production,” said a PSPCL official.

As per standardised calculations, washing reduces overall weight of coal by 2% for every 1% ash removal. As MCL coal has about 10 to 15% higher ash than the 34% limit, so on an average, coal weight will get reduced by about 25% after washing. Railways’ per tonne freight charges in case of TSPL is `2,700, which can be cut by up to `675 if the washed coal is used. The money thus saved will be PSPCL’s gain and subsequently consumers will have to pay lesser.

As per records, up to September 2016, the TSPL used 42-lakh tonne unwashed and only 6.50-lakh tonne washed coal. Thus PSPCL has been paying approximately `280 crore extra in freight charges per year to the TSPL, which saves nearly `435 crore on account of washing expenditure.

Sources said a PSPCL’s team tests coal at the TSPL plant and it brought the issue of use of coal having ash content up to 50% to the notice of the management, but the latter took no cognisance.