State-Run Company to Produce Gas from Coal; Syngas to be Made Available to Industries at Affordable Rates

Amid disruptions in gas supplies caused by ongoing tensions in West Asia, the state-owned coal company, Coal India Limited (CIL), is gearing up to produce syngas from coal. To this end, Coal India will establish syngas production units. Syngas is typically a mixture of carbon monoxide and hydrogen. It is produced from coal, natural gas, or biomass and is utilized in the generation of electricity, fertilizers, and fuels. According to sources, the company plans to set up these syngas plants either in close proximity to coal mines (at the pithead) or near industrial consumers such as fertilizer plants, gas-fired power stations, and Direct-Reduced Iron (DRI) units.

Coal India Holds 80% Share of the Country’s Total Coal Production

Coal India, which accounts for over 80 percent of the country’s total domestic coal production, has already taken preliminary steps in this direction. This initiative is viewed as being in alignment with the National Coal Gasification Mission and the government’s strategy to bolster the security of chemicals and raw materials. According to sources, the company plans to develop these syngas plants under either a Build-Own-Operate (BOO) or a Build-Operate-Maintain (BOM) model. Under these projects, a developer or a consortium will undertake the production of syngas from coal.

EOIs Issued to Identify Potential Bidders

Syngas finds application in sectors such as clean fuels, fertilizers, chemicals, and power generation. Coal India has also issued Expressions of Interest (EOIs) to identify potential bidders. Under this framework, the company has proposed two distinct models. Under the first model, syngas production units will be established within the precincts of Coal India’s mining areas, from where the gas will be supplied to nearby industrial clusters via a pipeline network. The objective of this approach is to reduce the costs associated with coal transportation and to make syngas available to industries at affordable rates. What is the Plan Under the Second Model?

Under the second model, syngas production units will be established in close proximity to gas-fired power plants, DRI plants, fertilizer units, or large industrial consumers. This approach will help enhance operational efficiency and supply reliability. The company believes that this arrangement will ensure an uninterrupted supply of syngas to the end consumer. Coal India is also actively seeking potential industrial customers capable of utilizing syngas as fuel or feedstock under long-term agreements. To this end, the company has issued a separate Expression of Interest (EoI) to gauge market interest, assess supply models, and evaluate commercial expectations.