Govt floats draft RFPs for setting up coal gasification units

A coal gasification plant

The Ministry of Coal has has issued three draft Requests for Proposals (RFPs) to seek feedback from interested government PSUs and private investors for the establishment of coal gasification plants in India.

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

Draft requests for proposals (RFPs) have been issued separately for each of the three categories. Category I allocates Rs. 4,050 crore to government PSUs to support up to three projects, offering a lump-sum grant of Rs. 1,350 crore or 15 percent of the capital expenditure, whichever is lower.

Also read: Govt likely to offer coal at lower than market rate for coal gasification projects.

In Category II, Rs 3,850 crore is earmarked for both the private sector and government PSUs, providing each project with a lump-sum grant of Rs 1,000 crore or 15 percent of the capital expenditure. Additionally, at least one project in this category will undergo a tariff-based bidding process.

Category III includes Rs 600 crore for 'demonstration projects' and 'small-scale gasification plants', offering a lump-sum grant of Rs 100 crore or 15 percent of the capital expenditure to entities with a minimum capex of Rs. 100 crore and minimum production of 1500 Nm3/hr syngas.

The Ministry has sought feedback until March 20, 2024. "All stakeholders are encouraged to provide their feedback to mail: hitlar.singh[at]nic[dot]in. This proactive measure underscores the Ministry's dedication to advancing coal gasification projects, with the intention of finalising the RFPs in March 2024," the Ministry of Coal said on March 6.

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 combustion of coal since emissions are trapped at the stage of gasification.

The Indian government wants 100 MT of coal gasification by 2030, with investments worth over Rs 4 trillion.