Coal gasification pilot yet to take off despite ₹6,233 cr incentives

New Delhi: Nearly a year after the Centre awarded eight coal gasification projects under a ₹6,233-crore incentive scheme to demonstrate the technology, none has moved beyond the planning stage, turning what was billed as a pilot programme into little more than a paper exercise.

The task force overseeing the projects has met eight times since the awards were announced, but work has yet to begin on the ground. The commissioning timeline has quietly slipped to FY30, while officials continue to describe the projects as "under implementation".

The first round was intended to demonstrate the commercial viability of coal gasification before a wider national rollout. Public sector coal and energy companies formed the backbone of the bidding pool after the government offered viability gap funding of up to 20% of plant and machinery costs to de-risk investments in the technology.


However, before any of the first-round projects has broken ground, the Centre has unveiled a second incentive scheme worth ₹37,500 crore to support 75 million tonnes of coal gasification capacity by 2030. The government has also clarified that projects selected under the first round will not be eligible for incentives under the new scheme.

The decision has left early participants at a disadvantage, despite being the first to commit capital to an unproven technology.

Land acquisition delays, unresolved coal linkage issues and financing hurdles have slowed almost every project awarded under the first round. Several are being developed by public sector undertakings that were expected to lead commercial deployment of the technology.

Instead, senior officials associated with the programme told ET that even preliminary engineering studies remain incomplete at most project sites.

Not a single gasifier has been commissioned or even physically installed at any site, an official said

Under Category-I for public sector undertakings, the Coal India-Bhel joint venture BCGCL received Rs 1,350 crore for its Lakhanpur project in Odisha, while a Coal India-Gail joint venture received an equal amount for a synthetic natural gas project at Sonepur Bazari in West Bengal.

Under Category-II, which was open to private companies, Jindal Steel and Power received ₹569.05 crore for its ₹3,793-crore direct reduced iron project at Angul. New Era Cleantech Solution received ₹ 1,000 crore for its Chandrapur project, while Greta Energy was awarded ₹414.01 crore for another project in Chandrapur.

Queries sent to Jindal Steel and Power and Coal India remained unanswered.

Despite being first movers, the companies have found themselves excluded from the second phase of the government's coal gasification programme.

That exclusion has become the biggest concern for first-round participants. Companies that backed a nascent, capital-intensive and unproven technology now find themselves shut out of a far more generous incentive structure that offers support of up to ₹5,000 crore per project, entity-level assistance capped at ₹12,000 crore and assured coal linkages for 30 years.

"These companies were waiting for more government support and incentives," A K Balyan, former MD and CEO of Petronet LNG Ltd, told ET. "Now the recent announced incentive, the government is saying that it will not provide to the current awardees. The industry is in talks with the ministry."