Adani’s ‘coal-to-liquid’ project hinges on new coal policy

Adani Group’s proposal to set up coal to poly-generation plant in Jharkhand with investment potential to the tune of Rs 50,000 cr would now largely depend on the new policy the Centre has propagated in recent times. Under this, the company has started looking at its own commercial coal block for the supply of the primary resource.

The change has come to fore since the Government went ahead mandating to use coal from any particular block for the purpose only has been allocated to. This stops any company from sourcing the supply for other than that the purpose or end use specified at the time of auctioning.

“We don’t have coal mine for coal to liquid project. Thus we have to get a commercial coal block through auctioning route for coal to poly-generation. The Center has recently come out with allowing even private players to bid for commercial operation of coal blocks. The company is looking to enter in bidding process once the policy is on the table for implementation,” said Rajesh Jha, CEO of Adani Group’s ‘coal to liquid’ project.

The proposal from Adani Group came to Jharkhand Government after the company won Jitpur coal block at Godda and went on signing stage-I MoU in 2015. As per the proposal the company was to produce urea, methane, power, methanol and SNG from coal. However the coal block was earmarked for power plant and thus technically cannot be sourced to run a coal to poly-generation unit.

“We would go for the state-II of the MoU with the State Government only after the coal block is identified for the purpose. Dedicated commercial mine is a prerequisite now. We were expecting any clear guideline from the Center on the new coal policy and auctioning by December but now indications are that it may happen by March next year,” added the CEO.

The State Government moreover on its part is ‘willing’ to extend support to the company looking at the importance of such projects for the progressive image of Jharkhand among investors.

“The proposal was very unique when it came to us and still holds importance in all the aspects for future. Issue has come up is about captive use of coal block. They have an option to get coal linkages from the Government owned companies like Coal India or JSMDC having commercial mining license as of now. If Adani approaches us to get that we would certainly assist,” Industry cum Mining Secretary Sunil Kumar Barnwal told The Pioneer.   

However the linkage route sounds unviable for Adani. “Coal linkages would not do things for us considering the quantum of coal required on consistent basis. Quality as well as quantity is unsure in such cases. We can go ahead once commercial coal block is secured to us. Once coal and water are available the project would be through,” said Rajesh Jha.

As per the initial proposal, the plant is to be set up in two phases. Capacity of the phase-I is urea-1.3 MMTPA, methanol-3.3 MMTPA, Substitute Natural Gas-8 and 4000 MW power.