Coal India arm incurs Rs 95 cr loss on blending steel grade coal with inferior type: CAG

23-Oct-2018

Coal India arm BCCL suffered Rs 95 crore loss due to blending inferior grade coal with superior steel quality dry-fuel, the government auditor CAG has said. Bharat Coking Coal Ltd (BCCL), one of the fossil fuel producing subsidiaries of CIL, is engaged in mining, washing and distribution of coal to meet the energy requirement of its consumers and produces both coking and non-coking coal.

“Steel grade coal is precious, fetches higher revenue and can be used directly by consumers in the steel sector. Due to relatively low ash content, it does not require washing. However, BCCL blended steel grade coal with inferior washery grade coal in its four washeries, instead of supplying the steel grade coal directly to customers and earning higher revenue,” the CAG has said in its latest report.

This has resulted in loss of Rs 95.09 crore to the company during 2013-14 to 2015-16, worked out on a conservative basis, it said.

Coking coal having less than 18 per cent ash is termed as steel grade coal, which can be used directly by consumers in the steel sector.

Coal having higher ash content (18 per cent to 35 per cent) is termed washery grade coal and requires washing to make it suitable for use in production of steel.

During 2013-14 to 2015-16, BCCL fed 26.33 lakh tonnes of coking coal into its four washeries by blending 13.91 lakh tonnes of steel grade coal with 12.42 lakh tonne washery grade coal, which finally yielded only 6.64 lakh tonne of washed coal (25 per cent) along with middling, slurry and rejects, it said.

The government auditor pointed out that this was done by BCCL despite having a memorandum of understanding (MOU) with Tata Steel and SAIL for supply of raw steel grade coking coal.

The company was to supply 25 lakh tonnes of raw coking coal to Tata Steel in 2013-14, which it could not supply, it said.

BCCL had also agreed to supply 12 lakh tonnes of steel grade raw coking coal to SAIL during 2014-15 to 2015-16, against which the company could supply only 1.02 lakh tonne, it said.

The yield of washed coal, even after blending of steel grade coal, was abnormally low during 2013-16, when compared to prior and subsequent periods, CAG said, and recommended for a critical review of the output to assure that the interests of the company have not been compromised.

Source: PTI