Prime Minister Manmohan Singh on Friday told the Planning Commission to get working on the Investment Commission recommendation to make converting coal to liquid fuel and gas an integral part of India’s energy security.
The directive came after the finance ministry constituted Investment Commission chaired by Ratan Tata made out a case for establishment of a coal-to-liquids industry at a meeting chaired by the prime minister. Finance Minister P Chidambaram and Planning Commission Deputy Chairman Montek Singh Ahluwalia were also present at the presentation.
India has over 200 billion tonnes of coal reserves, the fourth largest in the world. Even though not all of the reserves are extractable, India still has a significant proportion – nearly 10 per cent - of global coal deposits that can be recovered, the United States 27 per cent, Russia 17 per cent and China 13 per cent.
An official spokesman said the prime minister decided to set up an inter-ministerial group within the Planning Commission to examine the proposal and recommend a time-bound action plan.
India currently imports around 100 million tonnes of crude oil with a foreign exchange outflow of nearly US $ 34 billion. It is estimated that India may have to import 300 million tonnes of crude by 2030 at the present growth rate. Producing Ethanol and bio-diesel in a cost effective manner to be blended with petrol and diesel is one option being explored by the government to reduce the import bill; the Investment Commission says conversion of coal to liquid (CTL) could be another.
At its presentation before the prime minister, the commission argued that India’s dependence on imports could rise to 90 per cent of its oil requirement in the future, as new domestic discoveries of oil and gas were not expected to substantially reduce oil imports.
Nearly four to five CTL projects could double the domestic proven oil reserves, adding 20 per cent to India’s domestic oil reserves. These projects would produce not only diesel but also naphtha and LPG. Besides, the commission argued, that India’s low grade coal would not be a limitation to the industry.