CIL's Coal Gasification Projects In EPC Contract Model For Better Viability: Official

Coal India Limited on Thursday said that the coal gasification projects will be executed in an Engineering, Procurement, and Construction model to make the projects more viable by eliminating the risks for the operators of the plants.

This means that the entire equity for the project’s capex will be funded from the special purpose vehicles to execute these projects, and not by the 'operator of the plant', which will be appointed to run these highly sophisticated technologically advanced units to produce coal-to-chemical and coal gasification projects.

EPC, also known as turnkey construction contracts, is used for complex infrastructure projects.

“We will opt for the EPC contract model to make the execution of the gasification projects more attractive as it de-risks the operator. This will help us in faster execution of the project,” Coal India’s Director (Technical) B Veera Reddy said on the sidelines of the 17th Indian Coal Markets Conference organised by mjunction.

Coal India has announced the setting up of coal gasification plants to achieve the target of gasification of 100 MT of coal by 2030. CIL has already signed MoUs for JVs with PSUs in this regard.

CIL signed a JV agreement with GAIL for setting up a Coal-to-SNG Project at the Sonepur Bazari Area of Eastern Coalfields Limited of West Bengal, at an estimated project cost of Rs 13,052.81 crore, considering a debt-equity ratio of up to 70:30.

CIL has also signed MoUs with BHEL for setting up a Coal-to-Ammonium Nitrate Project at the Lakhanpur Area of Mahanadi Coalfields Limited in Jharsuguda district of Odisha, at an estimated project cost of Rs 11,782 crore.

Coal India has already received cabinet approval for equity investment in these projects.

On coal production, Reddy said it has produced 735 million tonnes and was trying to meet the target of 780 million tonnes.

The production may remain restricted to 770 million tonnes due to issues in South Eastern Coalfields Ltd. However, Reddy remained confident about the one billion production target in 2028-26 and said all plans are in place to achieve the target.

Addressing the delegates, he stated that the company is also focusing on underground mining, which is part of the sustainability action plan.

Meanwhile, around Rs 4,050 crore has been provisioned only for government PSUs, in which up to three projects will be supported by a lump-sum grant of Rs 1,350 crore each or 15% of the capex, whichever is lower as viability gap funding. This amount is part of the total Rs 8500 crore VGF provision for coal gasification projects.