Cabinet approves viability gap funding of ₹8,500 crore for coal gasification

The Cabinet on Wednesday chaired by  Prime Minister  Narendra Modi approved the scheme for the promotion of coal/lignite gasification projects of government PSUs and private sector with an outlay of Rs.8,500 crore towards incentive for coal gasification projects under three categories.

"We went to the cabinet and we have sanctioned an outlay of ₹8,500 towards incentive for coal gasification projects," Coal Minister Pralhad Joshi told reporters . The financial assistance has been made under three categories, he said.

The cabinet has approved the scheme as follows:

Total outlay of Rs.8,500 crore will be provided as financial assistance for coal gasification projects under three categories.

In category I, Rs.4,050 crore provisioned for Government PSUs in which upto 3 projects will be supported by providing a lump-sum grant of Rs.1,350 crore or 15% of capex, whichever is lower.

In category II, Rs.3,850 crore is provisioned for the private sector as well as Government PSUs in which a lump-sum grant of Rs.1,000 crore or 15% of capex, whichever is lower provided for each project. At least one project will be bid out on a tariff-based bidding process and its criteria will be designed in consultation with NITI Aayog.

In category III, Rs.600 crore provisioned for demonstration Projects (indigenous technology) and/or small-scale product-based Gasification Plants under which a lump-sum grant of Rs.100 crore or 15% of capex, whichever is lower, will be given to the selected entity that will have a minimum Capex of Rs. 100 Crore and minimum production of 1500 Nm3/hr Syn gas.

The selection of entities under category II and III shall be carried out through a competitive and transparent bidding process.

The grant will be paid to the selected entity in two equal installments.

EGoS chaired by Secretary Coal shall be fully empowered to make any changes required in the modalities of the scheme subject to the condition that overall financial outlay remain within Rs.8,500 crore.