Cabinet approves Rs 8,500-crore incentive scheme for coal gasification ventures

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New Delhi, January 24

The Union Cabinet on Wednesday approved a scheme for incentivising coal gasification projects in the country involving both state-owned entities and private sector players.

The incentive scheme will have an outlay of Rs 8,500 crore and it will encourage coal gasification projects under three categories namely for public sector undertakings (PSUs), private players and for small-scale projects and those based on indigenous technology.

Move to cut dependence on gas imports

• In the first category, Rs 4,050 crore have been provisioned for state-owned entities
• In the second category, Rs 3,850 crore have been allocated for private sector as well as government PSUs
• In the third category, Rs 600 crore have been sanctioned for demonstration projects (indigenous technology) and/or small-scale product-based gasification plants

The amount of Rs 8,500 crore will be given as an incentive for coal gasification projects, sources said.

In the first category, Rs 4,050 crore have been provisioned for state-owned entities, in which up to three projects will be supported by providing a lump sum grant of Rs 1,350 crore or 15% of capex, whichever is lower.

In the second category, Rs 3,850 crore have been allocated for private sector as well as government PSUs, in which a lump sum grant of Rs 1,000 crore or 15% of capex, whichever is lower, will be provided for each project. At least one project will be bid out on tariff-based bidding process and its criteria will be designed in consultation with Niti Aayog.

In the third category, Rs 600 crore have been sanctioned for demonstration projects (indigenous technology) and/or small-scale product-based gasification plants under which a lump sum grant of Rs 100 crore or 15% of capex, whichever is lower, will be given to the selected entity who will have a minimum capex of Rs 100 crore and minimum production of 1,500 Nm3/hr of synthetic gas.

In another decision, the Cabinet approved a proposal for equity investment by Coal India Limited (CIL) for setting up of coal-to-synthetic natural gas project at Eastern Coalfields Limited (ECL) command area through a joint venture of CIL and GAIL; and for setting up of coal-to-ammonium nitrate project at Mahanadi Coalfields Limited (MCL) command area through a joint venture of CIL and BHEL.

Coal Minister Pralhad Joshi said the coal gasification will ensure reduction of pollution to a large extent and several products are generated through the technology like synthetic gas, ammonium nitrate, ammonia and methanol etc. This will also ensure greater self-reliance in production of these products, Joshi said.