Coal India considers tie up with Sasol for CTL project

A senior company official says the plan is to set up new-age refineries that can realise the full value of coal

Coal India (CIL) is looking for newer ways to invest its surplus into technological innovations. It plans to invest Rs 10,000-12,000 crore over the next three to four years in producing hydrocarbons from coal. The state-owned firm is likely to tie up with Sasol of South Africa, a leader in coal to liquid (CTL) technology.

A senior official told Business Standard the plan is to set up new-age refineries that can realise the full value of coal. To begin with, CIL plans to use around 10 million tonne (mt) of coal to make products that can be used as substitutes for petroleum. This is not the first time CIL has looked at tying up with Sasol. Ten years back, a high-level delegation from Sasol visited India to hold discussions with CIL for a project to produce synthetic fuel from coal.

The South African firm was planning to put up plants for gas-to-liquids and CTL technology. Though that proposal did not take off, Sasol entered into a partnership with Tata group. The two floated Strategic Energy Technology Systems (SETSL), a joint venture between a consortium of Tata companies and Sasol.

In 2008, the ministry of coal invited applications for allocation of coal blocks for captive use for CTL projects. An inter-ministerial group (IMG) was constituted by the Centre to examine proposals. There were 22 applicants, including SETSPL, for the blocks.

SETSPL was allocated North of Arkhapal and Srirampur coal blocks in Talcher region of Odisha in February 2009.

However, the company got prospecting licence (PL) from the government of Odisha in March 2012. This was subsequently cancelled, sealing the fate of joint venture.

On its part, CIL had entered into a memorandum of understanding (MoU) with GAIL India, the country’s largest marketer and transporter of natural gas, for setting up of a surface coal gasification project for production of synthesis gas for fertiliser production in January 2008. As part of the MoU, GAIL and CIL were to make an investment of around Rs 2,400 crore. Subsequently, an MOU was signed with Rashtriya Chemical and Fertiliser for the use of this gas. It was estimated that the project would consume around 5,000 tonnes per day of coal to produce 7.76 million standard cubic metres per day of synthesis gas (equivalent to 3,000 tonnes per day of ammonia) for production of 3,500 tonnes per day of urea.

CIL’s current proposal is aimed at branching out into newer areas that have low carbon emissions. “For making a capital investment, we have to look at technology that is sustainable and can give an economic rate of return,” said a senior CIL executive.