By Rituparna Ghosh

January 31, 2024 - The Indian government has approved $1bn in financial incentives for coal gasification projects, as it seeks to reduce reliance on imported fuels and support indigenous technology.

Coal gasification involves extracting methane from coal during the mining process and utilising it for commercial purposes. The total outlay of 85bn rupees ($1bn) will be divided into three categories, India's Cabinet Committee on Economic Affairs (CCEA) announced on 24 January.

In the first category, Rs40.5bn will be provided to state-owned companies, also known as public sector undertakings (PSU), where the government will support up to three projects. In the second category, Rs38.5bn is earmarked for the private sector and PSUs, while the third category will provide Rs6bn for projects using indigenous technology, and small-scale product-based gasification projects.

The government aims to gasify 100mn t of coal by 2030 and envisions the adoption of indigenous technologies to produce chemical products and their derivatives, as part of the National Coal Gasification Mission.

The cabinet has approved two coal gasification plants, including a Rs130.5bn joint venture between state-run Coal India and gas distributor Gail, as well as a Rs117.8bn joint venture between Coal India and state-owned Bharat Heavy Electricals. "These two projects will be completed by 2028-29 (April 2028-March 2029)," minister of mines Pralhad Joshi said without giving details on the capacities of the proposed projects.

The Indian government had estimated in 2020 that it would require an investment of more than Rs4 trillion to gasify 100m t/yr of coal by 2030.

Coal India, Indian Oil, Gail, and Bharat Heavy Electricals are the firms that have so far announced plans to build coal-to-chemical projects that will convert coal into syngas, which can be subsequently processed for downstream production of value-added chemicals.The companies plan to produce dimethyl ether, ammonium nitrate and synthetic natural gas through these projects.