Union Cabinet approves Rs 8,500 cr incentive for coal gasification projects

The Union Cabinet on Wednesday approved Rs 8,500 crore financial incentive scheme for coal gasification projects.

In the first category, Rs 4,050 crore has been provisioned for public sector utilities (PSUs) in which up to three projects will be supported by providing a lump sum grant of Rs 1,350 crore or 15 per cent of capex, whichever is lower.

In the second category, Rs 3,850 crore has been earmarked for both government and private sector projects in which the lump sum grant of Rs 1,000 crore or 15 per cent of capex, whichever is lower, is provided for each project.

At least one project will be bid out on a tariff-based bidding process and its criteria will be designed in consultation with NITI Aayog, a government statement said.

The third category is for demonstration projects (indigenous technology) and/or small-scale product-based gasification plants under which Rs 600 crore has been provisioned by the Centre. This would entail awarding a lump sum grant of Rs 100 crore or 15 per cent of capex, whichever is lower.

“The coal sector is working on the direction of Prime Minister Narendra Modi to gasify 100 million tonnes of coal by 2030. Accordingly, The National Mission for Gasification envisions the adoption of indigenous technologies for the production of chemical products and their derivatives,” Union Coal and Mines Minister Prahlad Joshi said.

Coal gasification involves extracting methane from coal during the mining process and utilising it for commercial purposes.

An overarching scheme for coal gasification has been in the works for more than 15 years. It was, however, embroiled in revenue sharing tussle between the Coal Ministry and the Ministry of Petroleum and Natural Gas.

However, with the ambit marked and coal PSUs planning coal gasification projects, the Centre had lately received requests for viability gap funding.

Coal India Ltd has formed joint ventures with manufacturing major Bharat Heavy Electronics Ltd (BHEL) and state-owned gas utility GAIL Ltd to tap into the potential of coal gasification and its supply.

“In today’s CCEA and Cabinet, we have sought the approval for two coal-to-chemical products by setting up JVs between CIL, GAIL, and BHEL. I am happy to inform you that approval has been accorded for these 2 projects and these will be completed by 2028-29,” Joshi said.

The minister noted that this initiative will bring down import costs for India.

“In 2020, Coal India mines operations were impeded by the ramifications of the Lebanon explosion, which led to a shortage of ammonium nitrate. Such incidents in the future can be avoided if we augment domestic production India has a huge dependency on imports of crude and natural gas-based products mainly methanol, ammonia, ammonium nitrate, and olefins, which can be easily substituted by by-products derived from syngas,” the minister added.

Cabinet lauds PM for Ayodhya ceremony

The Union Cabinet on Wednesday lauded Prime Minister Narendra Modi for the successful consecration ceremony at Ram temple in Ayodhya, saying the love and affection shown by the people towards him have established him as a “Jan Nayak”. A resolution read out by Defence Minister Rajnath Singh at the meeting of the Union Cabinet also said the “people’s movement” for the Ram temple has heralded a new narrative and described Modi as a pioneer of a new era.