Government considering South African energy major proposal

Dec 13, 2007, 5:23 GMT

New Delhi, Dec 13 (IANS) The Indian government is seriously considering the proposal of the South African energy major Sasol for setting up a coal to liquid (CTL) fuel plant in partnership with the Tata Group despite the Planning Commission's reservations about it.

'Coal secretary H.C. Gupta is overseeing preparation of a discussion document that should take this project forward,' well-placed sources in the ministry said.

'The government is considering Sasol's proposal because it is a clean source of energy,' a senior official in the coal ministry told IANS.

Sasol and Tata plan to jointly set up an integrated CTL fuel plant at an estimated investment of $800 million.

The proposed plant will include key facilities for CTL fuel production besides captive coal mining, Sasol has outlined in its investment proposal.

Synthetic crude produced from liquefaction of coal is used by South Africa to meet as much as 30 percent of its fuel energy requirement.

Sasol is a leading player in synthetic crude production business in South Africa.

The South African energy major is betting on the relative profitability of selling synthetic crude vis-a-vis coal production.

In India, Sasol hopes to earn a profit of $32 per tonne by selling synthetic crude as against just $5 per tonne from coal.

As recently as October this year, the Planning Commission had averred that the proposed integrated CTL plant of the Tata-Sasol combine might not help enhance India's energy security simply because the country did not have surplus coal for production of synthetic petroleum products.

© 2007 Indo-Asian News Service