Prime Minister Manmohan Singh with Ratan Tata, chairman of the Investment Commission, in New Delhi on Friday. (PTI)

New Delhi, Jan. 5: Prime Minister Manmohan Singh has directed the Planning Commission to study the feasibility of converting coal to liquid fuel and gas following a recommendation from the Investment Commission headed by Ratan Tata.

The Investment Commission, in a presentation to the Prime Minister, has stated that the conversion of coal to liquid fuel (CTL) is feasible in India and should become an integral part of the country’s strategy for oil security.

Singh has asked the inter-ministerial group of the Planning Commission to prepare a time-bound action plan in this regard to ensure the nation's oil security.

The Investment Commission has pointed out that about five CTL projects can double the country's proven oil reserves and the liquid fuel produced would not only be petrol but also naphtha and LNG.

The commission highlighted the fact that the country would need to import over 90 per cent of its oil needs in the future and new discoveries were unlikely to reduce oil imports. CTL projects could, therefore, play a crucial role in ensuring the country's energy security.

It pointed out that low-grade coal in India was not a constraint on CTL projects and the output would be ultra clean. The project needed captive coal mines with reserves of 1.3 billion tonnes with open cast mining of pit-head coal.

The commission cited the South African example where CTL technology has been successfully used.

It has recommended that a mechanism for a Centre-state partnership is necessary to make such a project viable.

The Oil and Natural Gas Corporation (ONGC) has already roped in the Russians for a technical collaboration to try and convert India's vast underground reserves of coal into gas.

An MoU has been signed with the Skochinsky Institute of Mining for taking up underground coal gasification (UCG) projects in the country. The first pilot project is expected to start in the Mehsana district of Gujarat. These coal reserves cannot be mined in the conventional way as they are embedded too deep in the earth.

ONGC is also finalising an MoU with Coal India, Neyveli Lignite Corporation and Gujarat State Petroleum Corporation for co-operation in developing and applying this technology nationwide.

Ratan Tata also heads the steering group for preparing the country's action plan to utilise hydrogen and fuel cells, while Anand Mahindra is the co-chairman of the group.

Set up under the aegis of the ministry of non-conventional resources, the steering group is preparing an action plan for demonstration and commercialisation of hydrogen and fuel cell-powered vehicles and power generation systems in the country.

“The two leading industrialists from the auto sector had been chosen to head the committee so that the switch to alternative fuels take place at the ground level rather than being confined to mere academic research,” a senior official said.