Ministry of Coal to draw scheme for coal gasification projects with an outlay of Rs 60 billion

The Ministry of Coal has announced that it is considering a comprehensive scheme to promote coal/lignite gasification projects for both government public sector undertakings (PSUs) and the private sector with an outlay of Rs 60 billion.
Notably, the ministry has set a target to achieve coal gasification of 100 million tonne coal by 2029-30 to reduce India’s reliance on imports of natural gas, methanol, ammonia and other essential products. The scheme will be drawn in three segments to provide budgetary support to eligible companies, both PSUs and private entities, enabling them to undertake coal gasification projects. In the first segment, the government will provide support to government PSUs, while the second segment encompasses both private and government PSUs, with a budget allocation granted to each project. The selection of at least one project under this segment will be determined through a tariff-based bidding process, with criteria formulated in consultation with NITI Aayog. . The third segment involves the provision of budgetary support for demonstration projects utilising indigenous technology along with small-scale product-based gasification plants.  Further, the ministry is also considering an incentive to reimburse the goods and services tax (GST) compensation cess on coal utilised in gasification projects for a period of 10 years after the commercial operational date, provided that the GST compensation cess is extended beyond 2026-27. With this incentive, the government aims to offset the inability of entities to claim input tax credit for the same.