Exclusive: Govt to introduce policy on coal gasification by June

The Government of India is set to introduce a new policy on coal gasification by June, aimed at boosting the country's domestic coal gas production and reducing its dependence on imports.

According to sources, the policy will include several incentives to encourage private sector participation in coal gasification projects. These include exemptions from revenue sharing, capital support in the form of viability gap funding (VGF), tax incentives, and assured availability of coal.

To encourage companies to adopt this technology, the new policy will provide exemptions in revenue sharing for the first few years of operation. This will help reduce the financial burden on companies and encourage them to invest in this technology, as the cost of producing gas would be around 19$ per MGBTU, which is high. So, needed financial assistance for producing gas from coal. Currently, the spot is trading around 12$ per MGBTU, which reached 57$ last year.

In addition, the policy will provide capital support in the form of VGF (Viability Gap Funding) to cover the gap between the project cost and the funds available from investors. This will help in attracting more investors and will ensure the timely completion of projects.

Furthermore, the policy will also provide tax incentives to companies adopting coal gasification technology. This will include a reduction in tax rates and exemptions on certain taxes, and help reduce the overall cost of the project thereby making it more attractive to investors.

The policy will also ensure the assured availability of coal for companies adopting this technology. This will be done by allocating coal blocks to these companies, ensuring a steady supply of coal.

"The new policy is aimed at incentivizing private sector participation in coal gasification projects, which are critical to our efforts to reduce dependence on imports and boost domestic production," sources said.

Overall, the new policy on coal gasification is expected to provide a much-needed boost to this technology and will help reduce India's dependence on imported gas. The incentives provided in the policy will make this technology more attractive to investors and encourage more companies to adopt it.

Recently, the coal ministry reviewed the status of progress of gasification by PSU companies. Last year, the PSU companies had signed an MOU in this regard.

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