The Union Cabinet on Wednesday approved a multi-pronged scheme to promote coal/lignite gasification projects by state-run and private-sector companies with an outlay of Rs 8,500 crore.
It also approved two joint venture projects for coal gasification between Coal India and GAIL and Cail India and BHEL, both to be operationalised by 2028-29, the minister for coal and mines Prahlad Joshi said.
“The commencement of the project after tendering and awarding shall be done within six months,” the minister said. On its own, Coal India will set up two coal gasification plants in order to achieve the government’s target of 100 million tonne coal gasification by 2030.
The coal-to-SNG (synthetic natural gas) project in West Bengal and the coal-to-ammonium nitrate project in Odisha, both involving joint ventures with GAIL and BHEL respectively, have estimated project costs of Rs. 13,052.81 crore and Rs. 11,782.05 crore respectively.
India finds underground coal gasification important as it would help extract plentiful coal reserves that are deep, scattered and covered by forests. The syngas technology is for converting non-mineable coal/lignite into combustible gases through in situ gasification of the material.
The viability gap funding of Rs 8,500 crore by the government will be divided into three categories. Under Category I, with an allocation of Rs. 4,050 crore, targets government PSUs for up to three projects and each project will be eligible for a grant of Rs. 1,350 crore or 15% of the project’s capital expenditure, whichever is lower.
Category II targeting private sector and government PSUs, is assigned Rs 3,850 crore and will receive a grant of Rs. 1,000 crore or 15% of capex. The third category focuses on demonstration projects and small-scale product-based gasification plants with funds amounting to Rs 600 crore.
One project will be selected through a tariff-based bidding process, in collaboration with NITI Aayog, the government said. Earlier, CIL had inked three Memorandum of Understanding for undertaking of coal gasification projects each with GAIL, BHEL, and IOCL.
“Coal gasification can help in reduction of imports of ethanol, methanol, di-methyl ether, ammonium nitrate, all byproducts of the gasification process,” Joshi said.
India’s coal imports peaked in volume terms in FY20 at 249 million tonne (mt), while in FY23 also the inward shipments were quite high at 236 mt. The value of coal imports stood at a massive $48 billion last fiscal.
Rising coal imports have made it another strain on the country’s current account, along with imports of crude petroleum and, of late, edible oils. “We want to substitute about 110 million tonnes which is half of the total imports now through higher local production,” coal secretary Amrit Lal Meena had earlier told FE.