Financial Express. An inter-ministerial group (IMG) of the Indian government (earlier post) has cleared the $8-billion coal-to-liquids (CTL) project of the Tata group and its partner Sasol. The approval will pave the way for similar projects awaiting government clearance, including one by Reliance Industries Ltd.
The Tata/Sasol project is seeking no tax concessions or subsidies.
For the CTL plant in India, Sasol will use the Fischer Tropsch technology, which converts the syngas, extracted from coal into oil, which in turn can be refined to produce diesel, naphtha, jet fuel, LPG and lubricants. The project would save over $25 billion for the exchequer through crude import substitution.
The IMG earlier had reservations over the significant energy penalty implicit in the conversion process. Sources said a calculation circulated in the last IMG meeting showed that in financial terms, the cost of import is tilted in favour of coal at the level of prices for coal and oil prevailing in the international market in late 2007 ($80/tonne and $100 a barrel, respectively). It was pointed out in the IMG meeting that the financial advantage would remain valid even if the CIF price of oil fell to $50 a barrel and the CIF price of imported coal remained at $80 a tonne.