Coal India shifts to EPC for gasification projects

26 Mar 2024 CW Team

The EPC model, also known as turnkey construction contracts, is commonly utilised for intricate infrastructure initiatives.

"We have chosen the EPC contract model to make the execution of gasification projects more attractive, reducing risks for operators. This approach will facilitate expedited project implementation," stated B Veera Reddy, Director (Technical) of Coal India, on the sidelines of the 17th Indian Coal Markets Conference organised by mjunction.

Coal India has unveiled plans to establish coal gasification plants to achieve the target of gasifying 100 MT of coal by 2030. The company has already entered into MoUs with Public Sector Undertakings (PSUs) for joint ventures (JVs) in this domain.

A JV agreement was inked with GAIL for establishing a Coal-to-SNG Project at the Sonepur Bazari Area of Eastern Coalfields Limited (ECL) in West Bengal, with an estimated project cost of Rs 1,305.281 billion. Additionally, MoUs have been signed with BHEL for setting up a Coal-to-Ammonium Nitrate Project at the Lakhanpur Area of Mahanadi Coalfields Limited (MCL) in Odisha, with an estimated project cost of Rs 1,178.2 billion.

Coal India has secured cabinet approval for equity investment in these projects.

Regarding coal production, Reddy disclosed that the company has produced 735 million tonnes and aims to reach the target of 780 million tonnes. However, production may be limited to 770 million tonnes due to issues in South Eastern Coalfields Ltd. Nonetheless, Reddy expressed confidence in achieving the one billion production target by 2028-26, asserting that all necessary plans are in place.

He also highlighted the company's focus on underground mining as part of its sustainability action plan.

Meanwhile, a provision of Rs 40.5 billion has been allocated exclusively for government PSUs, where up to three projects will receive support through a lump-sum grant of Rs 13.5 billion each or 15% of the capital expenditure, whichever is lower, as viability gap funding. This allocation forms part of the total Rs 85 billion viability gap funding provision for coal gasification projects.

EPC model; Coal India; Gasification; projects; Improved viability; Coal Market

On 21 March Coal India Limited revealed its decision to adopt an Engineering, Procurement, and Construction (EPC) model for coal gasification projects, aiming to enhance project viability by mitigating risks for plant operators. This strategic shift ensures that the entire equity required for project capital expenditure will be provided by special purpose vehicles rather than the plant operator appointed to manage these sophisticated units for coal-to-chemical and coal gasification processes. The EPC model, also known as turnkey construction contracts, is commonly utilised for intricate infrastructure initiatives. We have chosen the EPC contract model to make the execution of gasification projects more attractive, reducing risks for operators. This approach will facilitate expedited project implementation, stated B Veera Reddy, Director (Technical) of Coal India, on the sidelines of the 17th Indian Coal Markets Conference organised by mjunction. Coal India has unveiled plans to establish coal gasification plants to achieve the target of gasifying 100 MT of coal by 2030. The company has already entered into MoUs with Public Sector Undertakings (PSUs) for joint ventures (JVs) in this domain. A JV agreement was inked with GAIL for establishing a Coal-to-SNG Project at the Sonepur Bazari Area of Eastern Coalfields Limited (ECL) in West Bengal, with an estimated project cost of Rs 1,305.281 billion. Additionally, MoUs have been signed with BHEL for setting up a Coal-to-Ammonium Nitrate Project at the Lakhanpur Area of Mahanadi Coalfields Limited (MCL) in Odisha, with an estimated project cost of Rs 1,178.2 billion. Coal India has secured cabinet approval for equity investment in these projects. Regarding coal production, Reddy disclosed that the company has produced 735 million tonnes and aims to reach the target of 780 million tonnes. However, production may be limited to 770 million tonnes due to issues in South Eastern Coalfields Ltd. Nonetheless, Reddy expressed confidence in achieving the one billion production target by 2028-26, asserting that all necessary plans are in place. He also highlighted the company's focus on underground mining as part of its sustainability action plan. Meanwhile, a provision of Rs 40.5 billion has been allocated exclusively for government PSUs, where up to three projects will receive support through a lump-sum grant of Rs 13.5 billion each or 15% of the capital expenditure, whichever is lower, as viability gap funding. This allocation forms part of the total Rs 85 billion viability gap funding provision for coal gasification projects.