Govt likely to offer coal at lower than market rate for coal gasification projects

The price of coal supplied to the power sector or the regulated sector is lower compared to the rate at which it is supplied to the non-regulated sector like steel and other industries.

The government is working on a policy to offer coal at lower rates than the market price for coal gasification projects. The government is also planning to offer pockets of land at concessional prices near mines run by Central Public Sector Undertakings (CPSUs) for setting up coal gasification plants, M Nagaraju, additional secretary and nominated authority at the Ministry of Coal, said on February 21.

Speaking to industry stakeholders on ways to promote coal gasification in Mumbai, Nagaraju said the government is working to ensure long-term linkages of coal for gasification projects. "This year we are going to achieve one billion tonnes (BT) of coal production in the country. By 2030, we are planning to ramp up coal production to 1.5-1.6 BT. So, there will be no shortage of coal hopefully and hence, we are planning to offer coal at notified price for the new coal gasification plants that are going to come up," he said.

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By "notified price", the government plans to offer coal at rates lower than the market rate and at par with what is offered to the power sector. The price of coal supplied to the power sector or the regulated sector is lower compared to the rate at which it is supplied to the non-regulated sector like steel and other industries.

Speaking on the issue of land availability, Nagaraju said that areas near mines that are available with the PSUs under the Ministry of Coal could be offered at "competitive and concessional prices" for setting up coal gasification units. These would also include de-coaled areas near active mines, he said and added that "De-coaled mines have plenty of water, which is required during coal gasification making the entire plan very suitable.

On January 24, the Union Cabinet gave its nod to the Ministry of Coal's proposal of rolling out the ambitious coal and lignite gasification programme under which a viability gap funding (VGF) worth Rs 8,500 crore will be offered to the public and private sectors.

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Coal gasification is a thermo-chemical process that converts coal into simple molecules, primarily carbon monoxide and hydrogen called synthesis gas or syngas. The combustion of this gas is cleaner and more efficient than the combustion of coal since emissions are trapped at the stage of gasification.

The Union government wants 100 MT of coal gasification by 2030, with investments worth over Rs 4 lakh crore.