Government to Begin Bidding Process for ₹37,500 Crore Coal Gasification Scheme; Targets ₹3 Lakh Crore Investment

The Ministry of Coal is set to release the draft Request for Proposal (RFP) for its ₹37,500 crore coal gasification incentive scheme by the end of next week.  

The final bidding document is expected by the end of June or early July after consultations with industry participants, as per news reports. 

The timeline was shared during a stakeholder roadshow in New Delhi, where government officials outlined the proposed framework and sought feedback from companies interested in developing gasification projects. 

Incentive Scheme to Draw Large Investments 

The Centre approved the ₹37,500-crore scheme on 13 May, adding to an earlier support package of ₹8,500 crore.  

Together, the 2 programmes are to support coal gasification projects and related downstream industries. 

Government estimates indicate that the scheme could attract investments of ₹2.5 lakh crore to ₹3 lakh crore across nearly 25 projects.  

Officials also said the allocation could be reviewed if applications exceed the available funding. 

Wider Product Coverage  

Reports clarified that the list of eligible products under the scheme is not limited to those specifically mentioned in the guidelines.  

The ministry said the list is illustrative, allowing a range of projects to qualify for support. 

All derivatives of syngas, including LNG, propane, and downstream chemical products, will be eligible.  

Incentives will also cover value addition beyond syngas production and extend to the final downstream product, according to the ministry. 

Funding Structure Revised 

The government has revised the disbursement mechanism to reduce funding pressure during the initial stages of project development. Earlier, incentives were to be released in 2 stages. The revised framework divides payments into 4 phases. 

Under the new structure, 25% of the approved incentive will be released after statutory clearances and financial closure.  

The remaining amount will be linked to expenditure milestones, project commissioning, and operational performance. 

Policy Support Under Discussion 

The ministry said discussions are underway with the fertiliser, petroleum and other ministries on possible support mechanisms for products manufactured through gasification. However, securing commercial buyers will remain the responsibility of project developers. 

Coal India is also reviewing coal linkage and supply arrangements, while coal-producing states such as Chhattisgarh and Madhya Pradesh are working on incentive policies to attract investment. 

Read More: Fuel Price Hikes Reduce Daily Losses of State-Owned Oil Firms from ₹1,000 Crore to ₹600 Crore! 

Conclusion 

The coal gasification scheme is moving towards the bidding stage, with the draft tender expected shortly. Industry feedback received during the consultation process may lead to further refinements before the final RFP is issued. 

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