Reality Check: Indias Coal Strategy

There has been much talk about India building its coal-based technologies in order to meet
increasing energy and feedstock demands for chemical processes. Coal will be most useful in
the power sector whereas syngas can be added to natural gas to produce feedstock.
K Venkataramanan, President Operations & Member of the Board, Larsen & Toubro,
gives insights into the viability of coal gasification technologies for power & process industries
in
India
With India's increasing energy appetite, arent we late in developing our coal assets? I
dont think so. The government has made definitive efforts towards development and
allocation of coal blocks linked to power plants. Ultra Mega Power Plants (UMPP) is a good
example, where you can submit tenders for projects linked to the pre-identified coal blocks.
Current process of coal block allocation is more efficient as compared to the earlier one, as
the owners did not have to adhere to the timelines to develop the blocks. As a result, they
never
really
integrated
or
developed
the
coal
assets.
However, following the lines of NELP for hydrocarbons, the government is in the process of
framing a new bidding policy, based on certain parameters for the coal projects that would
require the coal fields to be developed within a fixed timeframe, failing which would allow the
government to put up the same block for bidding in the next round of auctions. The
government is trying to put a stronger process in lace, which may take some time.
How prepared is India to use coal as feedstock for processes?
It may be a little too early to use coal as feedstock for the process industry because of high
ash content present in Indias indigenously available coal. Although we were pioneers and in
fact, two decades back set up the countrys first coal-based fertilizer plant in Ramagundam,
the project ran into trouble because of operational issues due to lack of expertise in using
high-ash coal as feedstock. The challenge here is to produce syngas with the correct
composition, in a cost effective manner, which is only possible when produced in large scale.
However, coal technology has made lot of progress in China where they are producing
fertilizers and methanol etc from coal. Indias first coal-based ammonia urea plant of large
magnitude is likely to come up in the next few years at Talcher in Orissa, with participation of
public sector companies for which formal bids are likely to be invited soon. Conversion of coal
to power is not complicated even with the high-ash content coal and is a more cost efficient
way than to produce from imported LNG. National Thermal Power Corporation (NTPC) plans
to put up Integrated Coal Gasification Combined Cycle (IGCC) process to produce power,
which is a good starting point, but economy-wise coal burnt in a supercritical boiler and
subsequent powering of a steam turbine would be cost-wise more efficient than IGCC process
for power production. NTPC is establishing parameters to make this economically
feasible.There have been significant investments worldwide in terms of deriving syngas to
produce process chemicals as well as development of Integrated Coal Gasification Combined
Cycle (IGCC) for power plants. Though coal as feedstock can be an alternative to gas for
producing chemicals & fertilizers, but it definitely can not be a replacement for many reasons;
one of them being the high cost of production of syngas as compared to the cost of available
gas.
What are the main challenges to produce syngas from Indian coal?
Cost and technology are two main challenges in syngas production. The ash percentage of
indigenously available coal ranges between 30-35 per cent even after washing, which is quite
high as compared to the variety of coal used in China where ash content ranges between 1520 per cent. The fact is that the technology for high-ash content to set up large scale projects
is yet to be proven. For smaller scale, fixed bed gasifiers can be used such as in steel plants,

but not in large scale plants like those of the order of 2,000 tonnes ammonia urea production.
Moreover, to produce contaminant and sulphur-free syngas, with particular composition at
large scale, is the most difficult part. Once this is achieved then proven technologies are
readily
available
to
produce
downstream
chemicals.
Tell
us
about
the
economics
of
using
coal
vis--vis
gas?
It makes more sense to use coal in power production as compared to syngas for process
because of the readily available technologies. Blending the coal can impact cost to a great
extent as moving coal from one location to another, especially the interiors, through railways is
a costly affair, which is the reason that most of the thermal plants are constructed close to the
pit heads. However, to use imported coal is a good option in case of plants located along the
coast. In fact, to blend imported LNG priced at around USD 8 mmbtu with domestic gas at
USD 5 mmbtu is a better option to produce and is more cost effective. Moreover, to move gas
through pipelines is environment-friendly and cost-effective as compared to moving coal
around. Whereas, using gas as feedstock to produce chemicals is economically viable as
compared to producing chemicals from syngas. Coal may supplement gas in chemical
production in the years to come, but gas is a better option for India at this point of time.
How do you see the governments plan to have Coal Regulatory Board in place?
Very recently, the government has set up Petroleum & Natural Gas Regulatory Board
(PNGRB) in place. This is indeed a welcome move, which will crease out various issues and
facilitate expediting projects in the coal space at a faster pace. With multiple ministries
working
on
this,
the
entire
process
may
take
some
time.
Land acquisition has always been a controversial issue for coal mining projects, how
should
this
issue
be
addressed?
Unfortunately most coal mines are located in the interior areas of the country, inhabited by the
tribal populations staying for many years. We need to have a strong corporate social
responsibility programme in place to ensure rehabilitation of the people living in those areas.
Very often local people residing near the mines feel cheated by the middlemen and deprived
of being offered fair deals. This would require the government to revisit its policies related to
land acquisition and look into the social aspects, which is critical as the number of coal mines
getting
opened
are
increasing.
What is the outlook for the coal sector five years from now?
We will definitely be in a much better position than where we are now and may be Talcher
would have been ordered. Indias democratic process will have to address various issues and
factor the interest of all the stakeholders. The progress needs to happen at greater speed like
how China has done.