A comprehensive scheme amounting to ₹6,000 crore is under consideration to promote coal and lignite gasification projects for both government PSUs and the private sector
A comprehensive scheme amounting to ₹6,000 crore is under consideration to promote coal and lignite gasification projects for both government PSUs and the private sector
PremiumThe Ministry of Coal has set a target to gasify 100 million tonnes of coal by the financial year 2030. A comprehensive scheme amounting to ₹6,000 crore is under consideration to promote coal and lignite gasification projects for both government Public Sector Undertakings (PSUs) and the private sector, as per a recent ministry announcement.
Mint first wrote about the government's plan for a ₹6,000 crore viability gap funding for coal gasification.
The ministry believes that adopting gasification technology will transform India's coal sector and decrease its dependence on imported natural gas, methanol, ammonia and other key products. As it stands, India imports about 50% of its Natural Gas, over 90% of its Methanol consumption and roughly 13-15% of its total Ammonia consumption to meet domestic demand.
The deployment of coal gasification will support India's 'Aatmanirbhar' vision, stimulate job creation and significantly reduce imports by 2030. Moreover, it presents a solution for environmental concerns, promising to lower carbon emissions and promote sustainable practices, aligning with worldwide commitments towards a greener future.
The government is also planning to extend budgetary support to eligible Government PSUs and the Private Sector, enabling them to undertake coal gasification projects. A tariff-based competitive bidding process, devised in conjunction with NITI Aayog, will determine the selection of at least one project in each segment.
Support is also being considered for pilot projects using indigenous technology or small-scale product-based gasification plants. Moreover, the ministry is contemplating a plan to reimburse the Goods and Services Tax (GST) compensation cess on coal used in gasification projects for a decade after their commercial operational date (COD), assuming that the GST compensation cess is extended beyond FY27.
In its drive to advance Surface Coal Gasification (SCG) projects across Coal India Limited (CIL) coalfields, the Ministry has been collaborating with various entities. In October 2022, strategic bilateral agreements were executed, including an MoU between BHEL & CIL, and another between IOCL, GAIL & CIL. These partnerships aim to strengthen cooperation and expertise to facilitate SCG projects' implementation.
The CIL board has approved the pre-project activities, such as topographical surveys, soil investigation and water availability studies for three projects, which include ECL, MCL, and WCL. Tenders are being invited to ascertain firm prices needed for preparing a Detailed Feasibility Report (DFR) for these projects. The CIL Board has also given 'in-principle' approval for the formation of Joint Ventures. Negotiations and finalization of the Joint Venture agreement are currently in progress.
