Sasol, Tatas set riders for mega coal-to-oil investment

New Delhi, May 22 | Updated: May 23 2007, 05:30am hrs
In what could lessen Indias reliance on oil imports and help lower fuel prices, the Tata group is planning to set up a plant to convert coal into diesel or crude oil in partnership with South Africas Sasol. The South African company is the worlds largest producer of motor fuel from coal.

The proposed coal-to-liquids (CTL) plant the first of its kind in Indiawas likely to result in annual import substitution benefits of about $25 billion (about Rs 1,02,500 crore) for the country, said an executive involved with the project. Tata group chairman Ratan Tata has already discussed the proposal with the finance ministry, the Planning Commission and the Prime Ministers Office.

At present, the coal ministry is studying the proposal. Since CTL is new to India, Sasol has asked the government that it be notified as an approved end-user for captive mining. It also sought clearance for rapid investigation of select coal blocks containing reserves of 1.5-2 billion tonne, an official said.

The company, which produces more than 40% of South Africas motor fuel, has further asked the government to reserve at east two possible sites for building CTL plants. It also wants a system of incentives to promote the CTL industry.

FUELLING DREAMS

Sasol wants to be notified by the Centre as an approved end-user for captive mining
It also wants the govt to clear investigation of coal blocks with 1.5-2 billion tonne reserves

The proposal, if it goes through, will help India, with the fourth largest coal reserves in the world, move closer to its quest for energy security. The size of investment in the proposed plant could not be ascertained. But unconfirmed media reports had earlier suggested Sasol was keen to pump in about $6 billion.

When contacted, a spokesperson of the Tatas said the group did not wish to comment on speculation.