With the soaring cost of crude oil, currently close to $130 a barrel, there has been a huge rush of proposals from big corporate houses for coal block for setting up a coal-to-liquid project. Prime Minister Manmohan Singh, as the minister in-charge of coal, has approved setting up of one coal-to-liquid (CTL) project in the country. Singh has directed the ministry of coal to invite fresh expression of interests (EOIs) for allotment of identified coal blocks for setting up a CTL project.
As per the ministry of coal estimates, coal reserves of about 1 to 1.5 billion tonne are required to produce 3.5 million tonne oil & oil products. The block/cluster of these coal blocks should enable mining operations of 28-31 million tonne run-of-mine coal per annum for 30 years. The estimated investment for setting up such a project is in the range of $6 billion to $8 billion.
The Tatas were the first to announce a technology tie-up with South Africas Sasol for setting up a CTL project, followed by Reliance, Jindals and Adanis submitting similar proposals along with the details of their respective technology partners. The inter ministerial group (IMG), headed by the member (energy) planning commission Kirit Parikh, had even approved the proposal of the Tatas for being allotted a suitable coal block for the CTL project.
However, the directive from the PM to the coal ministry on May 24 clearly says, Parties who have already put in unsolicited proposals may be advised to apply afresh in terms of the notice inviting applications. This means that all these companies, including the Tatas and the
Reliance Group, will have to submit fresh applications for securing suitable coal blocks.
The EoIs should be evaluated by the IMG and its recommendations provided to the coal ministry for making allotments, said the PMs directive to the coal ministry. Sources said the pre-qualification criteria had been finalised in consultation with the member energy, Planning Commission, also the chairman of the IMG. The eligibility criteria says the applicant company should have a minimum net worth of $1 billion or Rs 4,000 crore, besides having a tie-up with the proven technology providers.
A senior coal ministry official said the process of finalising norms for block allocation was through. Last date of receipt of applications is July 18.