March 7, 2024 - India's Ministry of Coal is seeking participation and responses on three requests for proposals from interested public sector undertakings and private investors for its planned coal gasification scheme, the ministry said in a document posted on its website March 6, as the country seeks to trim its dependence on natural gas imports amid volatile markets.

Now India's coal-based generation accounts for about 70% of the country's overall electricity generation.

The ministry said the objective of the scheme is to support demonstration of financial and technical viability of gasification projects more widely, accelerate markets for downstream products and create additional value in the economy for coal.

"The gasification technology shall not only contribute to the growth of the country in terms of domestic product development and import substitution for products like oil, gas, methanol, ammonia, urea and other products, but also ensure the diversified use of coal, which will ultimately make the country Aatmanirbhar (self-reliant) and ensure sustainability in the coal sector," the ministry added.

On the website, the ministry is inviting stakeholders to provide feedback and suggestions over March 6-20 on three categories of RFPs: setting up coal gasification projects for government PSUs and product-based coal gasification plants for the private sector and government PSUs, as well as demonstration projects or indigenous technology and/or small scale product-based plants for setting up the coal gasification project.

In 2021, the government released a Mission Document, with the Ministry of Coal outlining its commitment to achieve 100 million mt of coal gasification by 2030.

Some of the impediments to setting up coal gasification projects in India include its capital-intensive nature, the availability of limited number of technology providers locally, financing and a business threat from cheaper alternatives, market sources said.

To overcome some of these impediments, the Union Cabinet already approved an allocation of Rupee 85,000 million ($1.03 billion) as incentives for coal gasification projects.

In January, the government approved equity investment proposals for Coal India Limited to set up a coal-to-synthetic natural gas plant through a joint venture with GAIL and to launch a coal-to-ammonium nitrate project in partnership with BHEL.

Platts, part of S&P Global Commodity Insights, assessed India-delivered 5,000 kcal/kg GAR grade coal averaged at $89.93/mt in February, down from $106.23/mt in the same period the previous year, amid subdued demand in the spot market from major consumers, including China and India, for most of that period. The grade was assessed at $92.50/mt March 5.