Seven Coal Gasification Bids Reveal India’s Urea-First Wager

The Ministry of Coal said on September 8 it had received seven applications for a ₹37,500 crore coal gasification package. Four of those files are urea plants.

The first window closed on September 7 after a request for proposal issued on July 7. Round 2 opened on September 8, and later windows are due every two months. The product mix is already clear: fertiliser first, then steel feedstock, then synthetic gas.

Four of Seven First-Round Bids Target Urea

The ministry named five applicants and seven projects. Adani Enterprises Limited filed three separate urea plants. Talcher Fertilisers Limited filed a fourth urea plant. Gallantt Ispat Limited sought support for direct reduced iron and syngas. NTPC Limited filed for synthetic natural gas. Shyam Sel and Power Limited filed for syngas.

THE SEVEN FIRST-ROUND FILES

Four of the seven files point at urea. Two point at steel. One points at pipeline-quality gas. Listed-market talk has already treated the round as a contest between Adani Enterprises and NTPC. The applications themselves are a urea stack with a steel sidecar.

The files now go to evaluation under the scheme guidelines. No award has been announced, and the ministry has not published plant locations or capacities for the new bids.

The Scheme Caps Cash but Leaves Urea Uncapped

The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the Scheme for Promotion of Surface Coal/Lignite Gasification Projects on May 13. The Cabinet note sets a Rs.37,500 crore gasification outlay to push new surface plants that turn coal or lignite into syngas and then into fuels and chemicals.

Cash support is capped at 20 percent of the cost of plant and machinery. Payouts come in four equal instalments tied to milestones. Selection is competitive, with project cost, coal input and syngas output used as benchmarks. The note is technology-agnostic and says indigenous kits are preferred.

THE HARD CAPS IN THE MAY CABINET NOTE

• Per project: Support cannot exceed ₹5,000 crore for any single plant.
• Per group: One company and its holding, subsidiary and associate firms cannot take more than ₹12,000 crore across all files.
• Per product: Any one downstream product is capped at ₹9,000 crore, except urea and synthetic natural gas, which sit outside that lid.
• Coal use: The scheme is built to gasify about 75 million tonnes, inside a national aim of 100 million tonnes by 2030.

Urea and synthetic natural gas are the two products the Cabinet chose not to cap at ₹9,000 crore. That is why a first window stuffed with urea files and one NTPC gas file is not an accident of who showed up. It is the scheme doing what it was written to do.

The same note extends coal linkage tenure to 30 years under a Non-Regulated Sector sub-head for syngas. It also leaves the new cash on top of commercial mining incentives and other central or state schemes. The government puts likely investment at ₹2.5-3.0 lakh crore across about 25 projects and about 50,000 direct and indirect jobs in coal-bearing districts. Coal and lignite use at 75 million tonnes is put at ₹6,300 crore a year in royalty-type take, plus GST downstream.

Adani’s Three Files Meet a Group Ceiling

Three Adani urea files, if each hit the ₹5,000 crore project lid, would sum to ₹15,000 crore. The group lid is ₹12,000 crore. Even a clean sweep of the three Adani plants cannot pull more than that for the whole group. The extra headroom is the design, not a rounding error.

Gallantt Ispat runs integrated steel at Gorakhpur in Uttar Pradesh and at Samakhiyali in Kutch, with sponge iron already in the mix. A DRI-and-syngas file is a bid to put a gasifier under that chain, the same path Jindal Steel has already taken at Angul. Shyam Sel and Power is a West Bengal steel group with sponge iron, billets and captive power at Jamuria. Syngas on its own is the feedstock step before DRI, methanol or ammonia.

NTPC’s file is the other uncapped product: synthetic natural gas. That is coal turned into a substitute for imported LNG, not into another thermal plant.

Days before the window shut, the ministry had to swat away claims that the scheme had no takers. It said Talcher Fertilisers and NTPC had already uploaded files, and that other groups were still preparing. After the count came in, a senior ministry official treated the seven files as the reply.

When we said reports of ‘no takers’ were premature, we were confident that industry would respond and it has, decisively. Seven applications in the very first round, including from some of India’s largest industrial houses and public sector undertakings, are a clear vote of confidence in the scheme and in India’s coal gasification mission. The market has spoken, and it has spoken loudly.

Senior official, Ministry of Coal

The invitation itself had gone out from the ministry’s official account on September 3, with the first-round close set for September 7.

Unlocking the Potential of Coal & Lignite through Gasification

The Ministry of Coal invites applications under the Scheme for Promotion of Surface Coal/Lignite Gasification Projects, aimed at accelerating coal gasification and encouraging the value-added utilisation of domestic… pic.twitter.com/Xx6ajeR4jD

— Ministry of Coal (@CoalMinistry) September 3, 2026

Cost Overruns Follow India’s First Coal-to-Urea Plant

Talcher Fertilisers is the caution inside the new queue. The joint venture was formed to revive the old Fertilizer Corporation of India unit at Talcher in Angul, Odisha. GAIL (India), Coal India and Rashtriya Chemicals and Fertilisers each hold 31.85 percent. FCIL holds 4.45 percent.

The company’s own site says the plant is designed for 1.27 million tonnes of urea a year, with 2,200 tonnes a day of ammonia and 3,850 tonnes a day of neem-coated prilled urea. It is meant to take about 2.5 million tonnes of Talcher coal a year, with room to blend up to 25 percent petroleum coke because the coal is high-ash. Mechanical completion is listed for June 2027, with commissioning in December 2027.

CARE Ratings, in an April 1 note that assigned CARE BBB+; Stable to ₹12,250 crore of long-term bank lines, put the original approved cost at ₹13,277 crore and the revised cost at ₹19,062 crore. That is a ₹5,785 crore overrun. The same note records cumulative delays of about 51 months, with commissioning moved from an earlier timetable to December 31, 2027, and says the slip from the first due date in September 2023 is what fills that span.

Minister of State for Chemicals and Fertilisers Anupriya Patel told Lok Sabha the job was 71.24 percent complete as of February 2026. CARE traces the drag to the Chinese lump-sum contractor Wuhuan Engineering, pandemic stoppages, slow orders, incomplete invoices and later visa trouble for Chinese crews. Delays past two years pushed the old loans into stress under Reserve Bank rules. TFL prepaid about ₹4,501.61 crore of outstanding debt by June 2025 from promoter equity and inter-corporate loans, then closed a fresh package with a State Bank of India-led group.

TALCHER’S LONG ROAD TO A FIRST TONNE

1. October 27, 2015: Joint venture is incorporated to revive the Talcher urea site.
2. September 2019: Wuhuan Engineering takes the coal-gasification and ammonia-urea packages on a lump-sum turnkey basis.
3. April 20, 2021: The Cabinet Committee on Economic Affairs backs a concession that is meant to deliver a 12 percent post-tax return on equity.
4. September 2023: Original commissioning date is missed; later reviews move the target to December 2027.
5. June 2025: Outstanding project debt of about ₹4,501.61 crore is prepaid after the delay tripped regulatory stress tests.
6. April 1, 2026: CARE records the cost rising to ₹19,062 crore and flags first-of-kind technology risk on high-ash Indian coal.
7. September 8, 2026: TFL appears on the ministry list as a urea applicant under the new package.

Promoters had put in about ₹5,441 crore of equity by December 2025 against a ₹6,812 crore equity need. CARE also notes a sponsor undertaking to cover further overruns and keep debt-to-equity near 1.8:1. The Department of Fertilisers’ 12 percent post-tax IRR is the prop under the cash flows once the plant runs. Until then, Talcher is the country’s test of whether Shell-process gasification on high-ash coal can be built on a public timetable.

The new scheme is written for new surface plants and for new, unused machinery bought after approval. TFL’s file will be read against those rules. The ministry has not said whether the bid is for a second unit, for eligible new kit, or for a wider reading of “new”.

What India Spent on Urea Imports in 2025-26

The Cabinet note that launched the package put urea import dependence at about 20 percent, LNG at more than 50 percent, ammonia at about 100 percent and methanol at 80 to 90 percent. It put the FY2025 import bill for LNG, urea, ammonium nitrate, ammonia, coking coal, methanol, DME and related products at about ₹2.77 lakh crore.

Season-wise tables issued with a July 28 written reply by Anupriya Patel show how the urea line moved after that. Urea imports in 2025-26 were 39.79 lakh tonnes in kharif and 63.71 lakh tonnes in rabi, or 103.50 lakh tonnes for the year. The year before, the same two seasons summed to 16.66 plus 39.81, or 56.47 lakh tonnes. That is an 83 percent rise in imported volume, year on year.

UREA IMPORTS BY CROPPING SEASON

Domestic urea output in 2025-26 was 144.48 lakh tonnes in kharif and 148.78 lakh tonnes in rabi, or 293.26 lakh tonnes. Full-year requirement was put at 381.45 lakh tonnes, with DBT sales of 396.60 lakh tonnes. The farm-gate price of a 45 kg bag of neem-coated urea remains ₹242 before neem charges and tax, with the gap paid as subsidy.

That is the bill the urea files are meant to shrink. Gas-based urea still leans on imported LNG through the pooling system. Coal-to-urea is the attempt to swap that gas for a feedstock India already mines. Union minister Ashwini Vaishnaw, briefing after the May Cabinet, put likely investment around ₹3 lakh crore for plants that would gasify 75 million tonnes of coal.

One Large Gasifier Runs; the Rest Are Still on Paper

Minister of State for Coal and Mines Satish Chandra Dubey told Rajya Sabha on July 27 that about 22.6 million tonnes already counted as operational or under implementation. That stack is Jindal Steel Limited at about 8 million tonnes a year in operation at Angul, TFL at about 2.6 million tonnes still being built, and eight projects under the older ₹8,500 crore scheme at about 12 million tonnes.

WHERE THE 22.6 MILLION TONNES SIT

• Jindal at Angul: About 8 million tonnes a year, the only large commercial coal-gasification unit already running, feeding DRI.
• Talcher Fertilisers: About 2.6 million tonnes a year under construction, with commissioning listed for December 2027.
• Eight older-scheme projects: About 12 million tonnes a year, approved under the January 24, 2024 scheme; Dubey said one Jindal file has reached financial close and five projects have broken ground.

The January 2024 scheme pays up to 15 percent of capital cost. The May 2026 scheme pays up to 20 percent of eligible plant and machinery. Eight projects under the older round were described in the May Cabinet note as ₹6,233 crore of support under implementation. Dubey’s July reply says that once the ₹8,500 crore round, the ₹37,500 crore round and TFL are all on stream, import substitution from coal and lignite gasification is expected at about ₹1.5 lakh crore a year.

Other props already sit under the same bet. Coal for gasification can be linked at the power-sector floor price. Linkage tenure runs to 30 years. A 50 percent rebate on revenue share applies to coal used for gasification. Underground gasification has its own framework, with the block-auction floor cut to 2 percent from 4 percent.

India’s coal reserves are put at about 401 billion tonnes and lignite at about 47 billion tonnes, with coal still over 55 percent of the energy mix. The missing piece has been plants that turn that rock into urea, methanol, ammonia and gas at a cost the subsidy system will bear. Jindal’s Angul unit shows DRI can be done. TFL shows urea is harder.

Round 2 Is Open Before Round 1 Is Scored

The seven files will be scored against the scheme guidelines. Round 2 opened on September 8, the morning after the first close, and the ministry says windows will keep opening at two-month intervals. “Several prospective applicants are presently at advanced stages of project preparation and are expected to submit proposals in forthcoming rounds,” the ministry said.

That rolling door is an admission that a two-month first window, from the July 7 RfP to the September 7 close, was short for plants that need land, environmental clearance, coal linkage, technology tie-ups and a net-worth test. It is also how the ministry answers the “no takers” charge without pretending seven files fill a 75-million-tonne target.

Adani’s three urea bids, NTPC’s gas bid, two steel bids and TFL’s unfinished plant are the opening book on a ₹37,500 crore wager that domestic coal can stand in for imported urea, LNG, ammonia and methanol. The cash is capped. Urea is not. The plants still have to be built.