Government targeting 100 million tons of coal gasification by 2030

With growing emphasis towards clean energy solutions and the maximum utilization of abundant coal reserves, the government is aiming for coal gasification. This will help transforming coal into gaseous or liquid forms, which will be utilized as feedstock for various chemical and industrial process such as methanol and ammonia.

The government aims for 100-million-ton (MT) of coal gasification by 2030. It will be creating a new sub-sector for syngas production by providing long term coal allotments to gasification plants. 

This project is backed by financial scheme with an allocation of ~₹8,500 crores for incentivizing coal gasification projects. Moreover, it will be providing 50% rebate in revenue share in commercial auction policies for coal gasification.

With the government ambitious plans in place, Coal India has ventured into this project by a forming joint venture agreement with BHEL. This JV will engage in coal gasification to produce ammonia & nitric acid as intermediate products and ammonia nitrate as end products with an estimated total project cost of ~₹11,782 crores.

Also, Coal India has formed a JV with GAIL to set up a coal to synthetic natural gas project with the total project cost of~ ₹13,053 crores. It has floated an Expression of Interest (EOI) for shortlisting licensors of coal gasification technology for a proposed synthetic natural gas plant in West Bengal.

Thus, the government promoting coal gasification projects, which will hold immense potential for transforming coal into various valuable products. These initiatives will also act as a partial import substitution in the oil, gas, fertilizer, and petrochemical sectors.

We have a positive view on Coal India driven by the company’s ambitious goal of achieving 1000 MT of coal production by FY26, robust demand from the power sector, investments in new technology domains like coal gasification, inexpensive valuation, and healthy dividend yield.