The government has approved the ministry of coal’s proposal for the implementation of the ambitious coal and lignite gasification projects. The initiative involves offering viability gap funding (VGF) amounting to ₹8,500 crore to both public and private sectors. Coal gasification, a thermo-chemical process, transforms coal into simpler molecules, mainly carbon monoxide and hydrogen, forming synthesis gas or syngas. The combustion of syngas is environmentally cleaner and more efficient compared to coal combustion, as emissions are captured during the gasification stage.
As reported by moneycontrol, the government aims to achieve 100 MT of coal gasification by 2030, with investments exceeding ₹4 trillion. The allocated ₹8,500 crore for coal gasification projects will be distributed across three categories. In the first category, ₹4,050 crore is earmarked exclusively for government public sector undertakings (PSUs). Up to three projects will receive support through a lump-sum grant of ₹1,350 crore each or fifteen percent of the capital expenditure, whichever is lower.
The second category, with a budget of ₹3,850 crore, is designated for both the private sector and government PSUs. Here, a lump-sum grant of ₹1,000 crore each or fifteen percent of the capital expenditure, whichever is lower, will be provided. Additionally, at least one project will undergo a tariff-based bidding process, and the criteria for this will be formulated in consultation with NITI Aayog.
The third category allocates ₹600 crore for demonstration projects (indigenous technology) or small-scale product based gasification plants. The selected entity in this category will receive a lump-sum grant of ₹100 crore or fifteen percent of the capital expenditure, whichever is lower. To be eligible, bidders must have a minimum capital expenditure of ₹100 crore and a minimum production of 1,500 Nm3/hr of synthetic gas or syngas. The grant will be disbursed in two equal instalments to the selected entity.
