The Union Cabinet approved the Ministry of Coal’s proposal to develop a scheme to promote the coal/lignite gasification programme. The enterprise offers ₹8,500 crore as an incentive for coal gasification efforts in both public and commercial sectors.
Coal gasification, a thermochemical process that converts coal into simpler molecules such as carbon monoxide and hydrogen (known as synthesis gas or syngas), provides cleaner and more efficient combustion than typical coal burning. The emissions are collected throughout the gasification process.
The Indian government aims to achieve 100 million metric tonnes of coal gasification by 2030, with investments reaching ₹4 trillion. It also approved two joint venture projects for coal gasification between Coal India and GAIL, as well as Cail India and BHEL, which would be operational by 2028-29, according to Minister of Coal and Mines Prahlad Joshi.
What are three categories for coal project?
The Union Cabinet allocated ₹8,500 crore for coal gasification projects across three categories. The first earmarks ₹4,050 crore for government PSUs to finance up to three projects with a lump-sum award of ₹1,350 crore or 15% of capex, whichever is lower.
The second category allocates ₹3,850 crore to both commercial and government PSUs. The award will be a lump amount of ₹1,000 crore or 15% of the capex, whichever is lower. Furthermore, one project will be subject to tariff-based bidding, with criteria developed in collaboration with NITI Aayog.
The third category allocates ₹600 crore for demonstration projects that use indigenous technology or small-scale product-based gasification units. The selected business will get a lump-sum award of ₹100 crore or 15% of capex, whichever is less. To qualify, bidders must have a minimum Capex of 100 crore and a minimum production of 1500 Nm3/hr of synthetic gas, according to a cabinet statement.
The government would choose one project through a tariff-based bidding procedure in partnership with NITI Aayog, according to officials. CIL previously signed three Memorandums of Understanding with GAIL, BHEL, and IOCL to undertake coal gasification projects.
What are the other projects?
After the Cabinet meeting, Pralhad Joshi, Union Minister of Parliamentary Affairs, Coal, and Mines, announced the approval of two coal gasification projects.
“The cabinet, led by Prime Minister Narendra Modi, has approved CIL’s equity investment. This action enables CIL and GAIL to create a joint venture to establish a Coal-SNG project at ECL Command, while CIL and BHEL can form a joint venture to establish a Coal-Ammonium Nitrate project at MCL Command. This amazing choice will reduce our reliance on imports of petroleum and natural gas-based goods,” Joshi wrote on the X platform.
The coal-to-SNG (synthetic natural gas) project in West Bengal and the coal-to-ammonium nitrate project in Odisha, both of which include joint ventures with GAIL and BHEL, are anticipated to cost Rs. 13,052.81 crore and Rs. 11,782.05 crore, respectively.
India believes that underground coal gasification is crucial because it will aid in the extraction of abundant coal deposits that are deep, dispersed, and covered in forests. The syngas technique is for turning non-mineable coal/lignite into combustible gases by in situ gasification of the material.
“Coal gasification can help in reduction of imports of ethanol, methanol, di-methyl ether, ammonium nitrate, all byproducts of the gasification process,” Joshi said in a statement.
India’s coal imports peaked in volume terms in FY20 at 249 million tonnes (mt), and in FY23, inbound shipments were also relatively high at 236 mt. Last fiscal year, coal imports totaled a whopping $48 billion.
Rising coal imports have put additional burden on the country’s current account, alongside crude petroleum and, more recently, edible oils. “We want to substitute about 110 million tonnes, or half of total imports now, through increased local production,” said coal secretary Amrit Lal Meena.
