Government Approves Rs. 8,500 Crore Scheme to Boost Coal/Lignite Gasification Projects

In a move to promote sustainable energy initiatives, the Cabinet has given its nod to a comprehensive scheme aimed at incentivizing Coal/Lignite Gasification Projects. With a substantial outlay of Rs. 8,500 crore, the scheme is set to provide a major financial boost to both Government Public Sector Undertakings (PSUs) and private sector entities involved in such projects.

The approved scheme comprises three distinct categories, each designed to encourage and support different facets of coal gasification initiatives. The total outlay of Rs. 8,500 crore will be allocated across these categories as follows:

1. Category I – Government PSUs: A provision of Rs. 4,050 crore has been earmarked for Government PSUs. Up to three projects will be supported, with a lump-sum grant of Rs. 1,350 crore or 15% of the capital expenditure, whichever is lower.
2. Category II – Private Sector and Government PSUs: A total of Rs. 3,850 crore has been allocated for both private sector entities and Government PSUs under this category. Each project will receive a lump-sum grant of Rs. 1,000 crore or 15% of the capital expenditure, whichever is lower. Additionally, at least one project will undergo a tariff-based bidding process, with criteria designed in consultation with NITI Aayog to ensure transparency.
3. Category III – Demonstration Projects and Small-Scale Gasification Plants: With Rs. 600 crore set aside for this category, the focus is on indigenous technology and small-scale product-based gasification plants. Selected entities will receive a lump-sum grant of Rs. 100 crore or 15% of the capital expenditure, whichever is lower. To qualify, entities must have a minimum capital expenditure of Rs. 100 crore and a minimum production of 1500 Nm3/hr Syn gas.

The selection process for entities falling under Categories II and III will be conducted through a competitive and transparent bidding process. The grant disbursement will be carried out in two equal instalments, providing financial support at key stages of the project.

Empowered Group of Secretaries (EGoS) chaired by the Secretary of Coal will be fully authorized to make necessary adjustments in the scheme’s modalities, ensuring flexibility while adhering to the overall financial outlay of Rs. 8,500 crore.

This ambitious scheme aligns with the government’s commitment to promoting cleaner energy alternatives and fostering innovation in the coal and lignite sectors, marking a significant step towards achieving sustainable and eco-friendly energy solutions.