BIFR hurdle for coal gasification-based fertiliser plant

The fate of the Rs 8000-crore coal gasification project cum fertilizer plant at Talcher planned by a consortium of three companies- Coal India Limited (CIL), GAIL India Limited and Rashtriya Chemicals and Fertilizers (RCF) hinges on bringing the ailing Fertilizer Corporation of India out of the purview of the Board for Industrial and Financial Reconstruction (BIFR).

Moreover, the project needs the approval of the Union Cabinet.

The coal gasification project and the fertilizer plant is proposed to be set up at the closed Talcher unit of FCI which is currently under BIFR.

“The progress on the project depends on economic viability. FCI is currently under BIFR and it has to be brought out of the BIFR purview before the project kicks off. The techno-economic feasibility study on this project is underway”, a highly placed CIL official told Business Standard.

Each of the three companies- CIL, GAIL and RCF which will have an equal stake in the project, have already completed two rounds of talks on the matter.

It may be noted that the modalities of the project have changed ever since the project was envisaged in 2008. CIL had signed a Memorandum of Understanding (MoU) with ONGC for the coal gasification project while GAIL had inked an MoU with RCF for setting up the fertilizer plant as a 50:50 joint venture.

A coal block at Talcher Coalfields under the command area of Mahanadi Coalfields Limited (MCL), a subsidiary of CIL, been identified for this surface-based coal gasification project.

This coal block has a capacity of 5.5 million tonnes per annum and once washed, it will yield 3.7 million tonnes.

The gas so generated would be used for making urea and ammonium nitrate, one of the important explosives used by CIL. The fertilizer plant is expected to meet around 30 per cent of CIL's requirement of ammonium nitrate.

At present, CIL procures 3.5 lakh tonnes of explosives annually at a cost of Rs 1300 crore.

Meanwhile, CIL had also planned an under ground coal gasification project with Oil and Natural Gas Corporation (ONGC). The coal block identified for the coal gasification project is spread over an area of 4 sq km and it is located in the command area of Eastern Coalfields Limited (ECL), a subsidiary of CIL. Both CIL and ONGC had entered into a MoU (memorandum of understanding) for the coal gasification project in 2007 and the two entities were set to sign a 50:50 joint venture (JV) for the project. While CIL would offer a coal block for the project, ONGC was to decide the technology to be used for the project. The process of exploration of the coal block identified for the project would take around 18 months to be completed.

Following the completion of exploration, the relevant data collected would be submitted to a premier mining institute in Russia which would act as the consultant for the coal gasification project.

The reserves of the coal block identified for the coal gasification project and the expenditure on the coal gasification project can be ascertained after the completion of the exploration work.