Odisha holds up processing of CTL coal blocks

Blocks awarded to JSPL, Tata-Sasol

Two ambitious coal-to-liquid projects (CTL) proposed in Odisha by Jindal Steel & Power Ltd (JSPL) and the Tatas through a joint venture with South Africa’s Sasol, have plunged into uncertainty.

The Odisha government has held up processing of coal block applications for the two projects valued at over Rs 1 lakh crore amid an ongoing probe by the Central Bureau of Investigation (CBI).

“The state government was ready to expedite processing of coal blocks, especially the blocks for CTL projects which were put on top priority. But unfortunately, CBI probe into coal block allocation for CTL projects has proved to be a dampener. Now, we have been forced to halt processing of such blocks,” said a senior steel & mines department official.

The state government had issued prospecting license (PL) order in March 2012 for north of Arkhapal and Srirampur coal block in Talcher coalfields allocated to Strategic Energy Systems Pvt Ltd, a joint venture between a consortium of Tata companies and Sasol of South Africa. But PL deed was yet to be executed.

The other block- Ramchandi promotional coal block awarded to JSPL was yet to obtain PL order.

The CBI has initiated probe into allocation of coal blocks with estimated reserves of over 3,000 million tonne for two CTL blocks in Odisha. The Central investigative agency has sought file records pertaining to allotment of these two coal blocks from the Planning Commission.

Earlier, the Parliamentary Standing Committee on steel & coal had questioned the basis of allotment of the two blocks to privately run firms instead of state PSUs.

The two CTL projects, the only of their kind in the country, had not shown appreciable progress.

Though the state government had prepared the draft memorandum of understanding (MoU) to be signed with Jindal Synfuels Ltd, a JSPL subsidiary, the pact was yet to be finalised.

Recently, the state government had imposed fresh conditions on the CTL project proposed by JSPL. The state government has insisted on the original promoters to retain at least 51 per cent equity in the project till three years of start of commercial operations. The other conditions include achieving financial closure within a year of possession of two-thirds of allotted land and furnishing status on project milestones every six months

The JSPL project envisages a production capacity of 80,000 barrels of oil per day. It is coming up at Durgapur in Angul district and estimated to cost Rs 60,000 crore. The project needs 4,000 acres of land.

Similarly, the other CTL project being developed by Strategic Energy Technology Systems Ltd is coming up at an undecided location in Dhenkanal district at a cost of Rs 45,000 crore. This project too, would have a production capacity of 80,000 barrels per day and create about 6,400 direct jobs.