India BHEL Secures Coal Gasification Order In Odisha
State-owned engineering giant Bharat Heavy Electricals Limited (BHEL) has clinched a ₹5,400 crore order to design and build a large-scale coal gasification and syngas processing facility at Lakhanpur in Odisha’s Jharsuguda district, advancing India’s drive to deepen domestic value-addition in coal-based industrial supply chains. The contract, awarded by Bharat Coal Gasification and Chemicals Limited (BCGCL) — a joint venture between BHEL and Coal India Limited (CIL) — comes as policymakers seek to reduce reliance on imported chemicals and strengthen strategic industrial inputs.
Under the Letter of Acceptance issued in early January 2026, BHEL will deliver the coal gasification and raw syngas cleaning plant (LSTK-1 package) for BCGCL’s integrated Coal-to-2000 TPD (tonnes per day) ammonium nitrate project. The comprehensive scope includes engineering, procurement, construction, commissioning and a five-year operations and maintenance phase following performance guarantee testing — expected within 42 months of contract start. Coal gasification is a thermochemical process converting solid coal into synthesis gas or “syngas,” a feedstock for downstream chemicals like ammonium nitrate — crucial for mining, fertilizers and infrastructure sectors. This industrial pivot reflects a broader national agenda to transform high-ash domestic coal into higher-value products, reducing dependency on imported feedstocks and supporting Make-in-India objectives.
Industry stakeholders view the Odisha project as a milestone in India’s industrial decarbonisation and resource efficiency trajectory. Unlike traditional coal burning, gasification allows for more controlled pollutant management and cleaner utilisation of fossil resources, aligning with incremental climate resilience goals although it does not eliminate emissions entirely. Urban planners and energy analysts note that scaling such facilities could support nearby industrial clusters while mitigating logistics pressures on power and fertiliser supply chains. The contract has accounting and governance dimensions as well: BHEL holds a 49 per cent stake in BCGCL with CIL owning 51 per cent, and the transaction has been reported as occurring at arm’s length consistent with the joint venture agreement. This related-party nature has drawn scrutiny in financial markets, where the company’s stock has shown volatility following the announcement.
For BHEL, the Odisha award bolsters a growing order book and diversifies its project portfolio beyond traditional power-sector equipment into industrial gasification and chemicals infrastructure. The project dovetails with its broader strategic performance, which has featured strong order inflows and a push into advanced domestic technologies. Yet operational success hinges on effective execution of complex engineering workflows, supply chain integration, and adherence to environmental safeguards. Urban affairs experts emphasise that while coal gasification offers industrial advantages, rigorous oversight on land use, water impacts and air quality will be essential to ensure equitable and climate-aligned outcomes.
As India balances its twin goals of energy security and sustainable industrial growth, the Lakhanpur facility could become a template for future coal-to-chemicals investments. What remains critical is embedding resilient infrastructure planning, robust stakeholder engagement and environmental controls into such large-scale projects.
