Karandikars & Associates

1. The Scheme incentivizes entities to set up surface coal/lignite gasification projects
2. A total financial incentive of Rs 37,500 crore has been proposed under the Scheme
3. The Scheme shall provide financial incentive @ maximum 20% of the cost of plant and machinery (P&M), to the selected applicants
4. The Plant and Machinery (P&M) cost shall broadly include the cost of core plant and machinery, technology license, erection and installation for production of syngas and/or downstream product(s). The P&M cost shall not include expenditure on land, site development, buildings and civil works (not associated with erection and installation), pre-operative expenses, financing costs (including interest during construction), or any other soft costs
5. The Ministry of Coal shall devise a mechanism to ensure that the Scheme supports only new and unused P&M, procured and installed exclusively for the project. Any P&M that has been previously used, refurbished or transferred from another facility, shall not be eligible for receiving financial incentive under the Scheme
6. The financial incentive provided under the Scheme shall not be considered as equity contribution by the project developer for the purpose of financial structuring, debt financing, or financial closure

1. The financial incentive under this Scheme shall be available to applicants which are either Public Sector Undertakings (PSUs); or private sector companies; or joint ventures (JVs); or consortiums (not exceeding 3 companies)
2. The financial incentive under the Scheme shall be available only to entities who will undertake to set-up new surface coal/lignite gasification projects. Any expenditure made prior to the approval of the Scheme shall not be considered for incentive
3. Only those projects wherein net worth of the applicant is more than 20% of the total project cost, are eligible under the Scheme and shall be considered for further evaluation
4. The minimum plant capacity of a project, in terms of clean syngas shall be 0.5 MTPA (calculated based on annual plant availability of 330 days at an average clean syngas density of 1.1 kg/Nm3)
5. The Ministry of Coal may, while issuing Request for Proposal (RFP), prescribe additional eligibility criteria

Selection/shortlisting of applicants and allocation of financial incentive shall be undertaken through a transparent and competitive bidding process, implemented through the issuance of RFP, from time to time

1. Evaluation criteria shall be devised by benchmarking project cost and taking into account the quantity of coal used as input and quantity of syngas produced as output
2. Projects shall be evaluated under a pre-defined scoring framework, comprising the various parameters, for which scores shall be assigned based on the details furnished by the applicant/bidder
3. The scores obtained under these specified parameters of the evaluation framework shall be aggregated to arrive at a total score (out of 100), which shall form the basis for ranking of projects
4. The pre-defined scoring parameters under the evaluation framework shall, inter-alia, include:
1. Viability Amount Score: Calculated as lowest of financial incentive as percentage of cost of plant and machinery (P&M), amongst all bidders ÷ proposed financial incentive as percentage of cost of P&M by the bidder × 30 Illustration:




2. Plant Capacity: Size of the project in terms of syngas output (raw syngas and clean syngas)
3. Project Cost per MT of Coal: Total project cost expressed as ₹ per million tonne (MT) of annual coal/lignite utilisation (Rs/MTPA), including both feedstock and fuel requirements
4. Technology Tie-up: Tie-up with gasification technology providers
5. Financial Strength/Capability: Financial capability of the applicant assessed with reference to the net worth in relation to the project cost, with scores assigned on a pro-rata basis

1. Selection of projects shall be based on ranking in descending order of total score, subject to:
1. Achievement of a minimum qualifying score of 40 marks; and
2. Availability of funds under the overall Scheme outlay of Rs 37,500 crores, unless enhanced after due approvals
2. Evaluation of applications submitted by applicants shall be carried out by an Evaluation Committee constituted by Ministry of Coal
3. The following conditions shall apply to projects seeking financial incentives under the Scheme:
1. The financial incentive for any single project shall be capped at Rs 5,000 crore
2. The financial incentive for any particular product (except urea and Synthetic Natural Gas (SNG)) across all approved projects, shall be capped at Rs 9,000 crore
3. Any entity, including its holding, subsidiary, affiliate or associate companies, shall collectively not be eligible to receive financial incentive exceeding Rs 12,000 crore under the Scheme, across all projects. In case of Joint Ventures or Consortiums, the financial incentive shall be calculated among the participating entities in proportion to their respective shareholding pattern or ownership in the project(s)

The financial incentives will be disbursed in four equal instalments, linked to the achievement of specified milestones, as follows:

1. 1st instalment (25%): Upon completion of following pre-implementation activities:
1. Land acquisition,
2. Grant of Environment Clearance (EC),
3. Coal/lignite tie-up for the project,
4. Finalization of the technology licensor,
5. Finalization of the EPC contractor (where applicable), and
6. Achievement of financial closure from banks/financial institutions

For disbursement of the first instalment, the Ministry of Coal shall consider the requirement of submission of Insurance Surety Bond or Bank Guarantee of an appropriate amount by the project developer

2. 2nd instalment (25%): (i) After disbursal of loan by the Bank/Financial Institution towards the project, (ii) 30% of the equity contribution by the project developers, and (iii) actual expenditure of 50% or more of the approved incentive amount, incurred on plant and machinery. This will be in the form of reimbursement towards actual expenditure
3. 3rd instalment (25%): On commissioning of the project
4. 4th instalment (25%): On achieving minimum 50% of the peak annual production capacity during the previous 365 days.

In the event of commissioning of the project beyond five (5) years, excluding any period attributable to Force Majeure, from the date of execution of the agreement (between the project developer and Ministry of Coal), the disbursement of the remaining financial incentive (as at the end of 5 years) shall be:

1. 50%, where commissioning occurs between 5 and 6 years
2. 25%, where commissioning occurs between 6 and 7 years
3. NIL, where commissioning occurs beyond 7 years

Project Management Agency (PMA) appointed for the purpose will verify the claims of expenditure

1. Under the provisions of commercial coal block auction, utilisation of coal is already permitted for coal gasification. The financial incentive under this Scheme shall in no way debar/restrict for any incentive to be claimed under commercial mining regime. The entities shall be eligible for any state level incentives that may be provided
2. No separate financial incentive of any nature will be considered for any project in addition to the financial incentive provided under this Scheme
3. The Ministry shall engage with coal-bearing States/UTs to facilitate and promote the development of coal/lignite gasification projects, including cluster-based development approaches, to enable infrastructure optimisation. Entities shall preferably set up surface coal/lignite gasification project at the pithead (criteria for pithead will be same as considered by the Ministry of Power for setting up coal-based thermal power plants)
4. The project implemented under the Scheme shall not be transferred, sold, or otherwise disposed of without prior approval of the Ministry of Coal, during the period of implementation of the project. In the event of any transfer, sale, or cessation of operations within the aforesaid period without prior approval, the financial incentive disbursed shall be recoverable, in full or on a proportionate basis, along with applicable interest, as determined by the Ministry

The entities shall have discretion to decide the downstream product(s) through coal/lignite gasification. An indicative list is as provided below:

The responsibility for offtake shall rest entirely with the project developer

The Scheme shall be technology agnostic. The applicants/bidders are expected to deploy latest technology available in the commercial space. Adoption of indigenous technologies shall be encouraged

The year-wise budget allocation under the Scheme, to be implemented over financial years FY 2026–27 to FY 2032–33, is outlined below:

1. EGoS chaired by Secretary, Expenditure will supervise the Scheme. In addition, EGoS shall be empowered to make any changes required in the guidelines of the Scheme, subject to the condition that the overall financial outlay remain within Rs 37,500 crores, unless enhanced after due approvals
2. The proposed constitution of EGoS will be (1) Secretary, Expenditure (2) Secretary, Coal (3) Secretary, Chemicals and Petrochemicals, (4) Secretary, Petroleum & Natural Gas, (5) CEO, NITI Aayog, (6) Secretary, Fertilizers, and (7) Secretary, Power
3. The Ministry of Coal will set up a Special Task Force consisting of Joint Secretary level officials from Department of Expenditure, Ministry of Petroleum and Natural gas, Ministry of Heavy Industries, NITI Aayog, Ministry of Steel, Dept. of Chemicals, and Dept. of Fertilizers, under the chairmanship of Additional Secretary (Coal) to review the progress of coal/lignite gasification projects on regular basis. Additionally, it is also proposed to appoint Project Management Agency to assist the Ministry