BEIJING, Aug 26: China will soon issue new regulations to put the brakes on increasing investment in the coal-chemicals industry which has been attracting interest amid soaring oil prices, state media said on Saturday.

“Investment in coal-chemicals projects in China has shown signs of overheating -- many proposed plants will face great risk both technical feasibility and capital investment if we don’t put a brake on them,” the China Daily quoted an unnamed NDRC official as saying.

“The upcoming policy aims to set the coal-chemicals industry on the right development track,” the official said.

The industry includes coal-liquefication technology which offers an alternative to crude and has attracted a surge in investment due to high global oil prices.

According to the commission, the majority of the projects underway, with an annual capacity of more than 100,000 tons, do not have a viable technology and do not satisfy the government’s criteria.

However, the regulations were not aimed at projects with foreign participation, according to the official.

In July, Anglo-Dutch energy giant Royal Dutch Shell and the main Chinese coal producer Shenhua announced they would launch a joint feasibility study for a coal-liquefication plant with an investment of $12 billion in the northwestern region of Ningxia, which has one of China's most important coal reserves.

South Africa's Sasol also has two factory projects in the northwest, in Ningxia and in Shaanxi province.

In July, the central government sent a circular to the local authorities ordering them not to authorize new investments in the sector, China Daily said.

“If not well planned, the increasing number of coal-chemicals plants in China may lead to huge wastage of natural resources,” the paper quoted Pan Derun, vice president of the China Petroleum and Chemical Industry Association, as saying.—AFP