Push for coal gasification may see Rs 30,000 cr investment by 2026

Coal gasification is the process of transforming coal and water into syngas. (A picture of a coal mine)

With several incentives and policy measures, the government is planning a big push for coal gasification. The coal ministry has prepared a proposal which is likely to be approved soon, sources said.

The ministry is all set to implement a project that will enable the utilisation of 100 MTPA of coal in gasification plants by 2030.

Sources said that in order to achieve this goal, the government was planning to provide assistance by way of capital support for the cost of plant and machinery, viability-gap funding, easy access to loans, and tax rebates.

Coal ministry officials have had several rounds of discussion with the ministry of finance. Sources said that initially around Rs 6,000-6,500 crore may be allocated for the programme. Apart from financial incentives, some policy measures — like assured coal supply and eased licence norms — are also under consideration, the sources said.

The ministry has also held consultations with private and public sector players like JSW, Adani Enterprises, Hindalco, L&T, BHEL, Coal India, and SAIL, who have evinced keen interest.

Earlier, Coal India Ltd (CIL) had formed JVs with BHEL, GAIL, and Indian Oil for coal gasification projects. Neyveli Lignite had also issued a tender for the same.

The government estimates that by 2024-25 India will have surplus coal, which can be easily made available for coal gasification projects.

Coal gasification is the process of transforming coal and water into syngas. Syngas can be an alternative to natural gas. It will promote cleaner and a more sustainable use of coal, as also help reduce the import bill.

Per government estimates, coal gasification will lead to an investment over Rs 30,000 crore by 2026. It will also lead to the direct and indirect employment of more than 21,000 people. Apart from this, coal gasification will help promote the development of states in the eastern and central parts of India.