Strategic Energy Technology Systems (SETSPL), a joint venture of Tata group companies and South African firm Sasol, has filed an application with the project monitoring group (PMG) at the Cabinet secretariat to help resolve the logjam over its proposed R60,000-crore coal-to-liquid project in Orissa.
The state government has delayed granting the project a prospecting licence deed by more than a year. The project involves setting up a 30-million-tonne-per-annum opencast coal mine for the coal-to-liquid (CTL) plant, which has a capacity of 80,000 barrels per day and houses a captive 1,100-MW power plant. The CTL plant is expected to come in handy for a country that?s trying to reduce its reliance on expensive, imported fuel.
?All subsequent milestones, such as forest clearance, environmental clearance and mining lease, depend on the PL deed and, hence, a PL execution order from the state government is extremely important for further developing the coal block,? SETSPL said in its filing to PMG.
In 2009, the coal ministry allocated captive blocks to the ambitious project following an elaborate process, after an inter-ministerial group selected two companies for as many CTL projects from among 22 applicants. One of them was SETSPL.
?The finalisation of a detailed configuration of the CTL plant and its product slate depends on a detailed understanding of the coal properties for CTL end-use and this can be done only after the PL deed is executed,? the company said.
When contacted, the company spokesperson told FE that though the block was allocated in February 2009, the PL order was issued by the Orissa government only on March 15, 2012. ?However, the government of Orissa is yet to issue the PL deed.?
The PL deed is necessary for the company to start the mandatory exploration and prepare a geological report, as prescribed by the ministry of coal (MoC). ?The process is that, only after the geological report can other mandatory milestones of the MoC be met, following which production can begin. Since the PL deed has not been received, all these steps cannot be completed. SETPSL continues to remain committed to project. We await the PL deed,? the spokesperson said.
After the company receives the PL deed, it will have to drill large-diameter boreholes to determine the detailed coal properties required for CTL end-use in not just the unexplored area of the block but in the already explored area as well.
The company was planning to approach State Bank of India or IFC, but that again depends on a detailed report on coal properties for CTL end-use.
With imports meeting 80% of domestic oil demand and draining foreign exchange reserves, the government amended the Coal Mines (Nationalisation) Act in July 2007 to include CTL industry as an end-user for allocation of captive coal blocks so that low-rank, high-ash coal, which is abundantly found in India, can be converted into environment- friendly liquid fuels.
The Tatas tied up with Sasol as it has proven technology, operating as it is two commercial-scale CTL plants in South Africa with a total capacity of 1,60,000 barrels per day. The Orissa project is of strategic importance as it aims to enhance the fuel security of the country by producing high-quality petroleum products from high-ash coal, reducing the dependence on costly crude imports.