Scheme for Promotion of Surface Coal/Lignite Gasification Projects

News: The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved a Scheme for Promotion of Surface Coal/Lignite Gasification Projects.

About Scheme for Promotion of Surface Coal/Lignite Gasification Projects

• It is a scheme to promote coal and lignite gasification projects.
• It is a major step towards cleaner coal utilisation, energy security and import substitution.
• Aim: The scheme aims to accelerate the conversion of coal and lignite into synthesis gas, or syngas, which can be used for power generation, fertilisers, chemicals and other downstream industrial products.
• Nodal ministry: The Ministry of Coal is the nodal ministry implementing it.
• Budget outlay: It has a budget outlay of Rs. 37,500 crore.
• Features:
  • Incentivisation: It is to incentivise new surface coal/lignite gasification projects for the production of syngas and its downstream products, targeting gasification of approximately 75 million tonnes of coal/lignite.
    • Financial incentive provided at a maximum of 20% of the cost of Plant and Machinery.
    • Disbursement method: Incentive disbursed in four equal instalments, linked to project milestones.
  • Capped financing: Financial incentive for:
    • Any single project capped at Rs. 5,000 crore
    • For any single product (except Synthetic Natural Gas and Urea) is capped at Rs. 9,000 crore
    • Any single entity group is capped at Rs. 12,000 crore across all projects.
  • Incentive under this Scheme is in addition to, and does not restrict access to, incentives under the commercial coal mining regime or schemes of other Central/State Government ministries.
  • Selection: Selection through a transparent and competitive bidding process, with an evaluation framework benchmarking project cost, coal input, and syngas output.
  • Technology adoption: The Scheme is technology-agnostic and encourages the adoption of indigenous technologies.