Govt invites bids for coal gasification projects from PSUs, private companies

New Delhi: The Ministry of Coal has invited bids from Public Sector Undertakings (PSUs) and private companies for setting up coal and lignite gasification projects. Bids have been invited from companies under three categories and those selected will be provided financial support by the Centre for setting up coal gasification projects. The government has set a target of gasifying 100 Million Tonnes (MT) of coal by 2030.

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“India has one of the world’s largest reserves of coal and in order to utilise coal optimally and reduce carbon gas emissions in the economy, the Ministry of Coal is implementing a new scheme on financial support for coal/lignite gasification projects. The objective of the scheme is to support demonstration of financial and technical viability of gasification projects more widely, accelerate markets for downstream products and create additional value in the economy for coal. The gasification technology shall not only contribute to the growth of the country in terms of domestic product development and import substitution for products like oil, gas, methanol, ammonia, urea and other products, but also ensure diversified use of coal which will ultimately make the country Atmanirbhar and ensure sustainability in coal sector,” said the Request for Proposal (RfP) floated by the Coal Ministry dated May 15.

Coal gasification project categories

Under Category I, Rs 4,050 crores will be provided to government PSUs or JV of PSUs. A total of three projects will be supported by providing a lumpsum financial incentive of Rs 1,350 crores or 15 percent of the capex, whichever is lower, to each selected PSU’s project. For this category, bidders will be ranked in descending order based on their bid score under respective downstream products, for example, methanol and syn gas. However, as far as possible, one project for a single downstream product for economies of scale will be taken up. “… to maximise the diversification of products, the Financial Incentive shall be allocated to Bidder 1, Bidder 3 and Bidder 6 on the basis of their rankings on Bid Score as well as inclusion of diversified products under the scheme as far as possible,” said the RfP. In case two bidders have the same bid score, the successful bidder will be the one who quotes higher plant capacity or lower viability amount as total percentage of capex.

Under Category II, Rs 3,850 crore has been provisioned for the private sector as well as PSUs. The projects qualifying for support under this category will receive a lump-sum financial incentive (in two equal instalments) of 15 percent of the Capex or Rs 1,000 crore, whichever is lower. At least one project will be bid out on tariff-based bidding process which is adopted for thermal power plant in the power sector. Under this category, the authority will evaluate the Technical Bids and the bidders who qualify the Technical Bid stage will become eligible for opening of the Financial Bid. Once the financial bid is opened, the bid score will be the sum of plant capacity score, viability amount score and sustainability score (based on the implementation of Carbon Capture, Utilisation and Storage technology). Just like Category I, bidders will be ranked in descending order for various downstream products which comprise their bid score.

Under Category III, Rs 600 crore has been provisioned for demonstration projects (indigenous technology) and/or small-scale product-based gasification plants undertaken by both the private sector as well as PSUs to develop indigenous coal/lignite gasification technology. For the third category of projects, the bid score will be the sum of plant capacity score, investment score and viability amount score.

Bids for all these categories have to be submitted within 120 days of the RfP issuance date.

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