In a major stride towards achieving energy self-sufficiency and reducing dependence on imports, the Ministry of Coal has unveiled a comprehensive scheme aimed at promoting coal gasification projects across India. With a proposed outlay of ₹6,000 crores, the scheme seeks to harness the potential of coal gasification to meet the country’s future energy needs while stimulating economic growth and fostering sustainability.
The ambitious proposal sets a target to achieve coal gasification of 100 million tonnes by the fiscal year 2030, reflecting the government’s commitment to harnessing the power of this innovative technology. Currently, India relies heavily on imports of natural gas, methanol, ammonia, and other essential products. By adopting gasification technology, the nation aims to reduce this reliance, contributing to its vision of becoming self-reliant (Aatmanirbhar) and creating a surge in employment opportunities.
The scheme, which encompasses both government public sector undertakings (PSUs) and the private sector, will allocate budgetary support to eligible entities through a competitive and transparent bidding process. The Ministry aims to accelerate the development of coal gasification projects by providing financial assistance and technical expertise to the selected projects.
Under the scheme, the government will provide support to government PSUs in the first segment. In the second segment, both private sector companies and government PSUs will compete for budgetary support, with the selection of projects being determined through a tariff-based bidding process. The criteria for selection will be formulated in consultation with NITI Aayog, the premier policy thinks tank of the Indian government. Additionally, the third segment of the scheme will offer budgetary support for demonstration projects utilizing indigenous technology and small-scale product-based gasification plants.
The implementation of coal gasification projects is expected to have far-reaching benefits. By reducing imports by 2030, India can strengthen its energy security and make significant progress toward achieving a greener future. Carbon emissions will be reduced, alleviating the environmental burden and contributing to the country’s global commitments to combat climate change.
To further incentivize coal gasification projects, the Ministry is also considering a scheme to reimburse the Goods and Services Tax (GST) compensation cess on coal utilized in gasification projects for a period of 10 years after the commercial operational date (COD). This incentive aims to offset the inability of entities to claim an input tax credit for the same.
Furthermore, collaborative efforts between various stakeholders are being pursued to advance Surface Coal Gasification (SCG) projects across Coal India Limited (CIL) coalfields. Strategic bilateral agreements, including Memorandums of Understanding (MoUs) between BHEL & CIL, as well as IOCL, GAIL & CIL, have been executed to foster cooperation and expertise in driving the implementation of SCG projects.
The Coal India Limited (CIL) Board has already accepted pre-feasibility reports for three projects in ECL, MCL, and WCL. It has also approved the initiation of pre-project activities such as topography surveys, soil investigations, and water availability studies. Tendering activities are currently underway to determine firm prices required for the preparation of a Detailed Feasibility Report (DFR) for these projects. Moreover, the CIL Board has given ‘in-principle’ approval for the formation of Joint Ventures, and negotiation and finalization of the Joint Venture agreement are currently in progress.
