Coal gasification VGF scheme likely to be out within a week: Sources

New Delhi: The Viability Gap Funding (VGF) scheme planned for coal gasification is expected to be out soon as it awaits approval from the Cabinet, sources aware of the development told PSU Watch. “The proposal is with the Cabinet. And it is expected to be cleared very soon,” said two sources aware of the development. Another source said that it is likely to be cleared within a week. The Ministry of Coal has been planning a Rs 6,000 crore VGF scheme for coal gasification for both private and public sector. The government has set a target of gasifying 100 MT of coal by 2030.

Coal gasification VGF scheme

The plan has two segments. In the first segment, the government will provide support to PSUs, while the second segment includes the private sector and PSUs both, with a budget allocation granted to each project. The selection of at least one project under this segment will be determined through a tariff-based bidding process, with criteria formulated in consultation with NITI Aayog.

The third segment involves the provision of budgetary support for demonstration projects, utilising indigenous technology and/or small-scale product-based gasification plants, the statement said.

The ministry is also considering an incentive to reimburse the Goods and Services Tax (GST) compensation cess on coal utilised in gasification projects for a period of 10 years after the commercial operational date (COD), provided that the GST compensation cess is extended beyond FY27. This incentive aims to offset the inability of entities to claim the input tax credit for the same.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)