Corporate majors like Reliance, Essar and GMR, which are vying for the USD 6-8 billion project to convert coal into oil, may have to share profits earned thereby with the government, official sources said.

“We have proposed the companies to share profits from coal-to-liquid (CTL) project with the government to which many have agreed to,” a top coal ministry official said.

Besides sharing profit with the firm finalised for the CTL project, the government would also earn royalty on coal mined from the three blocks on offer in Orissa, he added.

The Coal Ministry plans to allocate Radhikapur, Srirampur and Ramchandi coal blocks with cumulative reserves of about six billion tons for the proposed CTL project.

“Though there are three coal blocks on offer, only one may be initially allocated. Companies, however, can give their choices for any of the blocks,” the official said.

According to the Ministry, a 1.5-billion tonne coal block should enable mining operations of 28-31 million tons of run-of-mine coal per annum for 30 years.

In all, about two dozen companies are in race for CTL project. They include Mukesh Ambani-led RIL, Anil Ambani’s Reliance Power and Reliance Infrastructure, Tata Group, Essar Oil, JSPL, JSW Steel, GMR, Vedanta Aluminium, Sterlite Energy, Indiabulls, Welspun and Strategic Energy.

Public sector undertakings like SAIL, GAIL and Indian Oil too have evinced interest in it. In their bids, few companies had said their proposed CTL plants would have a capacity to produce 80,000 barrels of oil a day (4 million tons annually).

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