Business

Captive block for coal-to-oil project

KOLKATA: The Union Coal Ministry has invited applications for setting up coal-to-oil (CTL) projects offering for the first time a coal block for the purpose. CTL projects, seen as an alternative energy source, require huge reserves of coal and the block that has been offered will be in an area which is not with the public sector Coal India Ltd (CIL). An inter-ministerial group (IMG) has been set up to examine the proposals that would be received for CTL projects.

Sources said that this was also the first time that the end-use for captive coal blocks were being expanded and would substantially cover surface coal gasification and underground coal gasification projects.

At present, only power, iron and steel, and the cement sector are allowed captive coal blocks. The move on CTL gains significance in view of the spiralling prices of crude.

The CTL process enables production of oil and oil products including diesel from coal. About 1-1.5 billion tonnes of coal reserves of E and F grade is proposed to be made available. Sources said that while blocks would be selected in consultation with the CIL subsidiary, Centre Mine Planning and Design Institute (CMPDI), blocks already identified for development either by CIL, Neyveli Lignite or the Singareni Coal Company will not be offered to the private sector.

The blocks being offered will also have to be at a reasonable distance from existing mines.

However, companies proposing to invest in this would have to be big with a minimum net worth of about Rs. 4,000 crore since the expected investment for a 3.5 million tonne synthetic oil project is expected to be about $6-8 billion.

Several Indian corporate majors have already shown interest in setting up such units for which technology would have to be sourced from abroad.

© Copyright 2000 - 2009 The Hindu