Coal Ministry mulls Rs 60-bn coal gasification plan

17 Jul 2023 CW Team

The government is contemplating a scheme worth Rs 60 billion to promote coal gasification in India. The Ministry of Coal stated that the implementation of gasification technology in India would bring about a revolutionary change in the coal sector by reducing dependence on imports of natural gas, methanol, ammonia, and other essential products.

The ministry added that they were considering a comprehensive scheme to encourage coal/lignite gasification projects for both the public and private sectors, with a budget of Rs 60 billion. The selection of entities for the coal/lignite gasification scheme would be conducted through a competitive and transparent bidding process.

The plan consists of two segments. The first segment involves providing support to Public Sector Undertakings (PSUs), while the second segment includes both the private sector and PSUs, with a budget allocation for each project.

The selection of at least one project under the second segment would be determined through a tariff-based bidding process, with the criteria being formulated in consultation with Niti Aayog.

The third segment focuses on offering budgetary support for demonstration projects that utilise indigenous technology and/or small-scale product-based gasification plants.

Additionally, the ministry stated that they were contemplating an incentive 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), on the condition that the GST compensation cess is extended beyond FY27. This incentive aims to offset the entities' inability to claim the input tax credit for the same.

The ministry has set a target of achieving coal gasification of 100 million tonnes (MT) of coal by FY 2030.

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