China Petroleum & Chemical Corp, or Sinopec, plans to form a US$2.63 billion joint venture to build a coal-conversion project in Inner Mongolia to supply power to eastern China, the National Development and Reform Commission (NDRC) said Friday. The NDRC has been encouraging the conversion of coal to dimethyl ether (DME) because it is more efficient than diesel and produces fewer emissions. It can be produced from relatively inexpensive methanol, which may come from coal and natural gas. The project, which is expected to start operations around 2010, will have an annual capacity of 4.2 million metric tons of methanol and three million tons of DME, and will include two thermal power plants with a total capacity of 270 megawatts. Sinopec and China National Coal Group, the country's second-largest coal producer by output, will each hold a 32.5% stake and there will be 12.5% stakes apiece for Shanghai-based power and gas-supply firm Shenergy Group and Beijing property-to-energy group China Yintai Investment. Mongolia Manshi Coal Group will take the remaining 10%.