NTPC sole bidder in second round of India's $4bn coal gasification scheme

State-owned NTPC (NSE: NTPC) was the only company to bid in the second round of India's INR375bn ($4bn) coal gasification incentive scheme, the Ministry of Coal said on November 10, ANI reported.

NTPC, the country's largest power producer, put in two applications. One is for urea, a nitrogen fertiliser, and the other for methanol and dimethyl ether (DME), which are used in chemicals and fuels.

"The applications envisage the production of Urea, Methanol and Dimethyl Ether (DME)," the ministry said in a statement. It gave no details of the investment, locations or output capacity of either project.

The response is a sharp fall from the first round, which closed in early September with seven applications from five companies. NTPC has now filed three of the nine applications made under the scheme, and none of the four other first-round applicants, three of them private companies, came back for the second. That leaves one applicant in this round, despite the ministry's stated aim to encourage wider industry participation.

In the first round, NTPC proposed a synthetic natural gas project, Adani Enterprises filed three urea projects and Talcher Fertilisers one more. Gallantt Ispat applied for direct reduced iron and syngas and Shyam Sel & Power for syngas.

The Union Cabinet approved the scheme on May 13, and the ministry invited bids in July. It pays up to 20% of a project's plant and machinery cost, capped at INR50bn per project. Bids are taken in two-month rounds, and each later round is open only for whatever money is left once the previous one has been allocated.

The winner of the second round is due to be named on December 22, according to the ministry's round-two timetable. A third round opened on November 10 and runs until January 11, 2027. The ministry said it hoped repeated rounds would "encourage wider industry participation, attract investments and accelerate the adoption of coal gasification technologies".

Gasification turns coal into a gas that can be made into chemicals, fertilisers and fuels instead of being burnt in power plants. A home-grown urea supply would cut India's exposure to imported fertiliser, whose price was pushed up by the Iran war's fertiliser shock earlier this year. The ministry said NTPC's bids showed the technology's potential in "supporting domestic production of critical industrial products and diversifying the utilisation of India's indigenous resources".

India is aiming for 100mn tonnes of coal gasification capacity by 2030, 75mn tonnes of it to be built under this scheme. An earlier INR85bn incentive scheme approved in January 2024 is backing eight projects that are already under way.