Jindal Steel and Power Limited (JSPL),one of India’s biggest private sector Steel companies is looking to build a Rs 42000 crore ( ~$10 billion) Coal to Liquid (CTL) project in India’ eastern state of Orissa.Note JSPL is headed by Naveen Jindal who is also a leader of India’s ruling Congress party.This CTL plant will be a part of an ~$22 billion proposed investment in Orissa by the Jindal group.I had earlier written that the Tata-Sasol Group planned $10 billion CTL project might not be the best usage of India’s mineral and land resources.
Jindals and Tatas the only 2 shortlisted applicants for CTL projects in 2009
The Jindal Group along-with Tatas had been shortlisted from 22 applicants in 2009 for building Coal to Liquid projects in Orissa.They had also been awarded coal blocks for securing raw material for their plants.Note there was no revenue sharing agreement over these proposed projects.These plants which have a proposed timeline of 8 years to completion will produce around 80,000 barrels of petroleum products a day.Both these companies don’t have the technology as Sasol-Lurgi have monopoly over this technology,so don’t know what the criteria was for awarding these companies these huge coal blocks.Also both of them have no previous experience in CTL projects as well though both would have coal technology experience being heavily involved in the steel industry.
Sasol and Lurgi seem to be monopolistic holders of the Coal to Liquid (CTL) Technology
The technology provider for this project will be Lurgi, a German company which is also the technology provider for the Sasol Group which is a JV partner with the Tatas.In fact the Sasol-Lurgi JV seems to be the only Coal to Liquid (CTL) technology provider globally.The other plants being build in China and Qatar have also got these 2 firms playing the role .Note Lurgi has been bought over by the Air Liquide Group earlier.Sasol is a South African giant which controls most of the fossil fuel and petrochemical production in South Africa.It has come under criticism for deriving super normal profits and also for other infractions of the law as well.
Tata Sons and Jindal Steel and Power (JSPL) will be the first two companies in the country to produce oil from coal through projects entailing a total investment of about Rs 90,000 crore.A decision to this effect was taken by the prime minister’s office (PMO) on February 27 — two days before the code of conduct came into force. However, the haste would ensure no profit for the government because it will not get any share from the near 3.5 million tonnes of oil and oil products from each coal-to-liquid (CTL) block.
A top coal ministry official said Strategic Energy Technology Systems (SETSL) — the consortium between Tata Sons and South Africa-based Sasol Synfuels International (Proprietary) — has bagged the Arkhapal block.Jindal Steel and Power has been awarded the Ramchandi promotional block. Both the blocks lie in Talcher, Orissa.
On being contacted, a Tata Sons spokesperson said refused to make any comments.A JSPL spokesperson confirmed the company is interested in the project. The spokesperson, however, said the company has not received any written communication from the government. JSPL will partner with Germany’s Lurgi for developing the project.
The ministry official said that the government could not ask for its share from the CTL projects because the coal sector has not yet been opened for competitive bidding. A bill to amend the Mines and Minerals (Development and Regulation) Act, 1957, was introduced for discussion in Parliament during the recent session that concluded on February 26.
Targeting an investment of Rs 1 lakh crore in Orissa over the next one decade, the Naveen Jindal-led Jindal Steel and Power (JSPL) today said the company is likely to sign an MoU with the state for setting up a Rs 42,000-crore coal-to-liquid (CTL) plant next month.
“After completing the official procedures, we will sign an MoU for the CTL project involving an investment of Rs 42,000 crore,” JSPL Executive Vice-Chairman and Managing Director Naveen Jindal told reporters after a meeting with Chief Minister Naveen Patnaik here this evening.A coal-to-liquid project involves extracting fossil oil from coal. Once completed, this is will be first such project in the country.
Stating that he discussed with the chief minister the group’s four projects comprising the Rs 52,000-crore steel plant, a thermal power plant involving Rs 6,600 crore, the Rs 42,000-crore CTL plant and an industrial complex envisaging an investment of Rs 500 crore, Jindal said a total of Rs 1,01,100 crore would be invested in Orissa over the next decade.
Lurgi India Company Pvt Ltd (LND), a wholly owned subsidiary of the Frankfurt based Lurgi AG of Germany, has evinced interest to provide coal to liquid (CTL) technology to India. Many potential CTL project proponents like JSPL, GAIL, IOC, Sterling Energy, Bhushan Steel and others have identified Lurgi as a complete technology and engineering services provider for CTL projects.
Lurgi is a technology-based engineering company with expertise for entire processes chain of CTL projects and has the desired engineering experience of several decades.
According to sources, Lurgi has proposed to the coal ministry that it would be prudent to develop three-four CTL projects in India using low-rank high-ash coal from the large reserves in Orissa, Chhattisgarh, Jharkhand and West Bengal. The capacity of the plants could be 40,000 barrel per day (bbl/day) in the first phase with plans for expansion of 80,000 bbl/day.
Lurgi has argued that this approach will indeed help India to assimilate the technology & plant engineering and develop experience in plant operation and maintenance within a reasonable time frame. Sources said Lurgi’s interest to provide CTL technology is crucial when the coal ministry had put on offer three coal blocks in Orissa with combined estimated reserves of 6 billion tonne of coal — one block with 3 billion tonne and the other two blocks with 1.5 billion tonne each. The company that is allocated the block with 3 billion tonne reserves, however, will be allowed mining only up to 1.5 billion tonne of coal in line with the requirements of such projects, with the remaining coal in the reserves to be used for other purposes later.