Cabinet to consider ₹6000 cr of incentives to gasify coal

livemint.com:

NEW DELHI : The union cabinet will soon consider the ₹6,000-crore incentive scheme for coal gasification projects. The cabinet note has been finalized and moved for approval, said two people in the know of the development. The government will provide incentives for gasification under three components—those that are led by public sector units, those sponsored by private sector companies and pilot projects.

Under PSU-led gasification, a viability gap funding (VGF) of up to ₹1,000 crore or 10% of the expenditure for each project is likely to be provided. For private sector projects, government support would be up to ₹600 crore or 15% of the overall expenditure per project. Support for five pilot projects for technology development would be ₹100 crore per project or up to 20% of the cost.

“The scheme has been finalized and the cabinet note has been moved. Everything is done; Cabinet may take it up for consideration anytime soon. The proposal also includes the reimbursement of GST on coal used for gasification," said one of the two people mentioned above.

GST reimbursement may be given for a period of 10 years. PSU-led gasification projects would include the joint venture projects of Coal India with GAIL and BHEL which have failed to pick up after they were announced in October last year, said the second person. Last October Coal India signed three memorandums of understanding (MoU) with PSU giants Bharat Heavy Electricals Ltd (BHEL), Indian Oil Corporation Ltd (IOCL) and GAIL (India) Ltd.

“Investors were finding it difficult because the cost of the product was coming out to be higher, then the imported cost of product. This (VGF) will now bring viability," the person added. In an interview in July, coal minister Pralhad