BHEL and Coal India Invest Rs 250 bn in Odisha Gasification

25 Jun 2026 CW Team

Coal gasification will convert coal into synthesis gas, a versatile feedstock for chemicals, fertilisers and synthetic fuels, and the technology is expected to enhance the economic value of domestic reserves while supporting downstream industries. Officials project that the scheme will reduce import dependence for key feedstocks and strengthen energy security for manufacturing. The Odisha plant is intended to facilitate fertiliser production and generate local employment.

The Lakhanpur plant, developed by Bharat Coal Gasification and Chemicals Limited, a joint venture of BHEL and CIL, will be India’s first commercial coal-to-ammonium nitrate facility and is designed to produce 2,000 t per day of ammonium nitrate using indigenously developed gasification technology. A land lease for 350 acres under Mahanadi Coalfields Limited has been secured, and the project has received required clearances, with work to commence following the foundation ceremony. The Union Ministry of Coal is reported to be providing Rs 13.5 bn support under its incentive scheme.

A Central incentive outlay of Rs 460 bn has been announced to promote surface coal and lignite gasification projects. The programme is expected to catalyse investments of Rs 2.5–3 tn across around 25 projects and create roughly 50,000 jobs, with authorities estimating import substitution benefits equivalent to about Rs 2.7 tn annually.

The initiative is seen as a benchmark for future public sector collaborations in clean coal technology and a step towards diversifying Odisha’s coal sector into an industrial hub. With Coal India as the largest coal producer and national reserves exceeding 400 bn t, policymakers anticipate that gasification will underpin industrial self-reliance and strengthen manufacturing competitiveness.

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Bharat Heavy Electricals (BHEL) and Coal India (CIL) are jointly investing Rs 250 billion in a coal gasification project in Odisha, with the Prime Minister laying the foundation stone in Jharsuguda. Union Coal and Mines Minister G Kishan Reddy described the initiative as a transformative shift in coal utilisation that will open industrial avenues for the state. The project moves coal beyond conventional power generation to industrial feedstocks. Coal gasification will convert coal into synthesis gas, a versatile feedstock for chemicals, fertilisers and synthetic fuels, and the technology is expected to enhance the economic value of domestic reserves while supporting downstream industries. Officials project that the scheme will reduce import dependence for key feedstocks and strengthen energy security for manufacturing. The Odisha plant is intended to facilitate fertiliser production and generate local employment. The Lakhanpur plant, developed by Bharat Coal Gasification and Chemicals Limited, a joint venture of BHEL and CIL, will be India’s first commercial coal-to-ammonium nitrate facility and is designed to produce 2,000 t per day of ammonium nitrate using indigenously developed gasification technology. A land lease for 350 acres under Mahanadi Coalfields Limited has been secured, and the project has received required clearances, with work to commence following the foundation ceremony. The Union Ministry of Coal is reported to be providing Rs 13.5 bn support under its incentive scheme. A Central incentive outlay of Rs 460 bn has been announced to promote surface coal and lignite gasification projects. The programme is expected to catalyse investments of Rs 2.5–3 tn across around 25 projects and create roughly 50,000 jobs, with authorities estimating import substitution benefits equivalent to about Rs 2.7 tn annually. The initiative is seen as a benchmark for future public sector collaborations in clean coal technology and a step towards diversifying Odisha’s coal sector into an industrial hub. With Coal India as the largest coal producer and national reserves exceeding 400 bn t, policymakers anticipate that gasification will underpin industrial self-reliance and strengthen manufacturing competitiveness.

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