In a recent development aimed at accelerating coal gasification projects in India, NITI Aayog has proposed a differentiated pricing strategy for coal supplied to these ventures compared to the power sector.
Emphasising the need for lower coal prices to incentivise gasification endeavours, the government’s policy think tank is advocating for a pricing mechanism that ensures certainty for project developers. During a meeting convened to review the progress of coal gasification initiatives, NITI Aayog suggested that the price of coal allocated for gasification purposes should be set at a notified rate lower than that for the power sector. This move aims to create a conducive environment for both public and private sector stakeholders involved in coal gasification projects. NITI Aayog intends to provide a comfort letter to the Ministry of Coal to underscore the importance of this pricing strategy in promoting the gasification agenda. The meeting, chaired by Dr. V. K. Saraswat, Member of NITI Aayog, delved into various aspects including technological suitability, cost estimates, pilot project readiness, and parameters for competitive bidding projects.
Discussions also revolved around the ash content suitability for coal gasification, preparation of project reports, and the minimum plant size required for effective implementation. Additionally, there was a consensus on the necessity for NITI Aayog’s support in securing low-priced coal supply for gasification projects. The proposal put forth by NITI Aayog aligns with the government’s broader objective of promoting gasification to manufacture syngas-based chemicals and reduce import dependency. By advocating for a differential pricing mechanism, the aim is to foster a conducive environment for investment and innovation in the coal gasification sector, contributing to India’s energy security and self-sufficiency goals.
According to Amrit Lal Meena, Secretary, Ministry of Coal, the Centre wants more coal to be gasified so that syngas-based chemicals can be manufactured and import substitution takes place. “The government has taken major policy decisions to promote coal gasification,” he had previously told Hindu business Line. According to the official, the requirements broadly include land, raw materials, finances, technology and market. The government has approved a land leasing policy for setting up energy related infrastructure on land belonging to coal mining companies. Anyone setting up a coal gasification unit can look for land and lease it.
