Neyveli Lignite Corporation at forefront in Rs 46,000 cr coal gasification project

CHENNAI: The Centre will finalise and notify guidelines for its Rs 46,000 crore coal gasification incentive scheme within the next two months, a move expected to trigger fresh investments in projects aimed at reducing India’s dependence on imported fuels, fertilisers, and industrial feedstocks, Union Minister for Coal and Mines G Kishan Reddy said here on Sunday.

The Neyveli Lignite Corporation in Cuddalore is set to share centre stage under this scheme with the Rs 4,394-crore lignite-to-methanol plant located at Neyveli.

The scheme forms a key part of the government’s strategy to achieve the target of gasifying 100 million tonnes of coal by 2030 while strengthening energy security and promoting domestic manufacturing.

“Within two months, the guidelines will be finalised, after which we can start the activity,” Kishan Reddy told reporters at Kamalalayam, Tamil Nadu BJP headquarters here, adding that over 35 companies are expected to enter the sector once the framework is notified.

He said the incentive programme, backed by a financial outlay of Rs 46,000 crore, would support investments in technologies that convert coal into synthesis gas and downstream products such as methanol, ethanol, ammonia, urea and synthetic fuels. The initiative aims to reduce imports of products for which India continues to rely heavily on overseas supplies.

Reddy said the draft framework had undergone extensive consultations with industry stakeholders, including roadshows and discussions with prospective investors.

Companies approved under the scheme would be eligible for long-term coal linkages of up to 30 years, while foreign firms could participate through Indian-registered entities or joint ventures.

Noting that India possesses the world’s fifth-largest coal reserves, he said coal continues to account for nearly 73% of thermal power generation in the country. Coal gasification, he added, would help derive greater value from domestic resources while reducing the import bill for key industrial inputs.

Referring to the Rs 25,016 crore Lakhanpur coal gasification project in Odisha, for which Prime Minister Narendra Modi laid the foundation stone on Saturday, he described it as a significant milestone in the country’s efforts to build a domestic coal-to-chemicals ecosystem. The project is expected to produce value-added products including methanol, ammonia and synthetic fuels.

NLC and Bhabha Atomic Research Centre are also setting up a pilot project at Neyveli to extract rare minerals

On critical minerals, Reddy said the Centre is advancing the Rs 34,000 crore National Critical Mineral Mission to secure resources essential for clean energy technologies, electronics, defence and advanced manufacturing. India has already acquired a lithium asset in Argentina and is pursuing mineral opportunities in countries including Australia and Chile, he said.

Highlighting a Tamil Nadu-linked initiative, the union minister said NLC India Ltd has partnered with the Bhabha Atomic Research Centre to extract rare earth elements from fly ash generated by lignite-based power plants.

A pilot project is underway, and commercial production is expected within a year, opening up a new domestic source of strategically important minerals.