PSU Consortium Eyes Strategic Partnerships for Coal Gasification Projects

In a strategic move to harness coal gasification as a potent energy source, a consortium of public sector companies, spearheaded by Coal India Ltd and mandated by the Union Government, is open to collaboration with external partners for upcoming projects.

The focus is on diverse business models, with a keen emphasis on the Engineering, Procurement, and Construction (EPC) framework. Coal India Ltd, along with its consortium partners, is set to initiate surface coal gasification projects, a revival in interest after a period of dormancy. Unlike traditional methods, surface coal gasification eliminates the need for new block allocations, leveraging existing mines identified for this purpose. Importantly, these projects fall under the Ministry of Coal, mitigating potential conflicts with the Ministry of Petroleum & Natural Gas. Recently in Hyderabad, Coal Secretary Amrit Lal Meena, when talking to stakeholders about coal/gasification projects, highlighted the government’s schemes for the purpose. At the same platform, Coal India Chairman PM Prasad, spelled out the opportunities in coal gasification and called on interested players having the technological capacity to partner with CIL towards building a cleaner future and help achieve the net zero target by 2070.

 

Sources within Coal India indicate that the execution of these projects will follow a meticulous tendering process for EPC, with finer details currently under consideration. The move aligns with the Government’s approval of a comprehensive scheme to promote coal/lignite gasification projects, allocating a substantial incentive of ₹8,500 crore under three distinct categories. Under Category I, government PSUs stand to benefit from ₹4,050 crore, supporting up to three projects through a lump-sum grant of ₹1,350 crore or 15% of the capital expenditure, whichever is lower. Category II allocates ₹3,850 crore for both private sector and government PSUs, offering a lump-sum grant of ₹1,000 crore or 15% of the capex for each project. Additionally, Category II introduces a tariff-based bidding process for at least one project, with criteria shaped in consultation with Niti Aayog.

In Category III, ₹600 crore is earmarked for demonstration projects (indigenous technology) and small-scale gasification plants, extending a lump-sum grant of ₹100 crore or 15% of capex, whichever is lower. The selected entity must have a minimum capex of ₹100 crore and a minimum production of 1,500 Nm3/hr Syn gas.

The Union Cabinet’s approval also includes equity investments by Coal India Ltd for coal-to-Synthetic Natural Gas (SNG) projects and coal-to-ammonium nitrate projects through strategic joint ventures. This consortium-driven approach reflects a concerted effort to propel sustainable energy initiatives and further solidify India’s position in the evolving energy landscape.