The Union coal ministry has invited applications for allocations of captive blocks for converting coal into liquid fuel like petrol, diesel and others.
Will allocate 1-1.5 bn tonne reserves as captive blocks for converting coal into liquid fuels
NEW DELHI: The Union coal ministry has invited applications for allocations of captive blocks for converting coal into liquid fuel like petrol, diesel and others.
The coal reserves of about 1-1.5 billion tonnes will be made available for producing oil and oil products, the ministry said on its website.
“The blockcluster of blocks should enable mining operations of 28-31 million tonnes of run-of-mine coal per annum for 30 years,” the ministry said.
Coal liquefaction and underground coal gasification were allowed as permissible end uses for allocation of captive blocks in August last year, a government official said.
“While we have invited applications to allocate coal blocks for coal-to-liquid (CTL) projects, the blocks for coal gasification projects are yet to be identified,” the official said.
The government has also constituted an inter-ministerial group to examine the proposals received for allocation of captive coal blocks to CTL projects. The group has representations from Planning Commission, ministries of finance, coal, commerce, petroleum and natural gas, and others.
The applicant company shall have a minimum net worth of Rs 4,000 crore to be eligible, considering the huge investments required in CTL projects, the ministry said.
“Since the expected investment for a 3.5 million tonne oil and oil-products project is expected to be around $6-8 billion, the applicant company should have minimum net worth of Rs 4,000 crore,” it said, adding that the companies will also have to provide the details of collaborations or tie-ups with technology providers, as the technology for CTL projects may not be indigenously available.
The minimum eligibility criteria fixed by the government would ensure that only serious players enter the business.
“The government wants to make sure that only the companies who mean business and who know the value of this mineral are allowed entering into the area,” a research analyst said requesting anonymity.
The government is following the similar model like the one seen for big projects like ultra mega power projects, he said.
Reliance Industries had earlier informed the government that it is ready with an $8-billion investment plant to establish a coal-to-liquid plant and thus be allocated coal mines with reserves of about 1.5 billion tonnes of coal.
It said the plant will have a capacity to produce 80,000 barrels of oil a day. South Africa’s Sasol Ltd, world’s largest producer of liquid fuels from coal, has also evinced interest in establishing a CTL project in India in collaboration with the Tata group, and has asked for similar coal mines.
Though coal liquefaction releases very high amount of carbon dioxide, raising concerns on global warming, it can potentially limit the escalation of oil prices.
As per some estimates, producing liquid fuels from coal in the US achieves break-even with oil priced at $35 per barrel. This is significantly lower than the current global crude oil prices, hovering above $135 per barrel.
a_shaleen@dnaindia.net
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