Centre urges States to adopt coal gasification incentives

The Government on Thursday said Odisha and Maharashtra have introduced their State-level incentive schemes to boost coal gasification projects, and the Centre is persuading other States like Chhattisgarh, Uttar Pradesh, Jharkhand, Andhra Pradesh, Telangana, and Assam to also follow suit.

The development assumes significance against the backdrop of geopolitical headwinds and West Asia crisis-triggered fuel market volatility.

Speaking during the roadshow on the scheme for promotion of surface coal/lignite gasification projects, Coal Secretary Vikram Dev Dutt said, “We have engaged effectively with States. Some of them have been more than proactive in realising that coal gasification is the future, and at the State level they need to design a shelf of incentives which would actually attract and encourage industry to actually set up large-scale coal gasification projects.”

Odisha and Maharashtra Governments have moved very proactively and have schemes in place, Dutt said.

The secretary further explained the implications of these incentive schemes and said that while capital expenditure support for plant and machinery will be provided under the new Central Government scheme, state-level incentive packages will go a long way in reducing the operating expenditure of these projects.

“The engagement with state governments is very proactive from our side. We believe that Chhattisgarh is already on the drawing board and at an advanced stage of an incentive scheme for Chhattisgarh. In Madhya Pradesh, we have taken up, and the minister has been speaking to both these States and Andhra Pradesh as well.”

Coal and Mines Minister G Kishan Reddy said the Centre is in regular discussions with States like Chhattisgarh, Uttar Pradesh, Jharkhand, Andhra Pradesh, Telangana and Assam, to bring in State-level schemes for promoting coal gasification.

“We are regularly talking to state governments... different states like Chhattisgarh, Uttar Pradesh, Jharkhand, Andhra Pradesh, Telangana, Assam, should bring such a policy. We are talking to the chief ministers of these States. In some time they will also come with such incentives,” the minister said.

The minister also highlighted West Bengal, noting that with a new Government now in power, investments should be directed towards coal gasification projects in the state.

“In West Bengal, the new Government has come, and I believe that investment should be made in coal gasification projects in this State,” he added.

The Union Cabinet had this month approved an Rs 37,500-crore incentive scheme to promote coal gasification projects, aimed at boosting clean energy production and reducing dependence on forex-guzzling imports of LNG, urea, and methanol, while insulating the country from global price volatility and supply chain disruptions.

The Union Cabinet under the chairmanship of Prime Minister Narendra Modi approved the scheme for promotion of surface coal/lignite gasification projects with a financial outlay of Rs 37,500 crore.

Coal gasification refers to the process of converting dry fuel into synthetic gas (syngas), which is used as an alternative fuel and helps reduce carbon emissions. This process supports production of methanol, fertilisers, hydrogen and chemicals, cutting reliance on imports.

The scheme marks a major step towards accelerating the country’s coal gasification programme, advancing the national target of gasifying 100 Million Tonnes (MT) of coal by 2030, strengthening energy security, and reducing dependence on imports of key products such as LNG, urea, ammonia and methanol.