Cabinet approves funds for coal gasification projects worth Rs. 8,500 crores

Coal gasification is considered a cleaner option compared to the burning of coal. Gasification facilitates the utilisation of the chemical properties of coal.

"The Cabinet today sanctioned Rs 8,500 crore in viability gap funding for coal gasification. Out of the sanctioned amount, Rs 4,050 crore will be for joint ventures between Coal India and GAIL and Coal India and BHEL," Coal Minister Pralhad Joshi said while briefing the media on Cabinet decisions.

As per the scheme, financial assistance for coal gasification projects would be provided in three categories.

In the first category, Rs 4,050 crore has been provisioned for government public sector undertakings (PSUs), in which up to 3 projects will be supported by a lump-sum grant of Rs 1,350 crore or 15% of capex, whichever is lower.

In category II, Rs 3,850 crore has been provisioned for the private sector as well as government PSUs, in which a lump-sum grant of Rs 1,000 crore or 15% of capex, whichever is lower, would be 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.

"In category III, Rs 600 crore has been provisioned for demonstration projects (indigenous technology) and/or small-scale product-based gasification plants, under which a lump-sum grant of Rs 100 crore or 15% of capex, whichever is lower, will be given to the selected entity, which will have a minimum capex of Rs 100 crore," said an official statement.

The government had earlier launched the National Coal Gasification Mission to achieve coal gasification and liquefaction of 100 million metric tonnes (MT) of coal by 2030.