State-run Coal India and Bharat Petroleum Corporation on Monday executed a non-binding memorandum of understanding (MoU) to explore setting up of coal to synthetic natural gas (SNG) project at Western Coalfields through surface coal gasification.

Western Coalfields’ Majri area in Maharashtra is where the proposed project has been envisioned. The capital expenditure for the project would be around ₹12,214 crore. The annual capacity of SNG that is proposed to be produced would be 633.6 million Nm3, according to sources close to the development.

“Coal India (CIL), a Maharatna PSU under the Ministry of Coal, and Bharat Petroleum Corporation (BPCL), a Maharatna PSU under the Ministry of Petroleum & Natural Gas, executed a non-binding MoU in Mumbai to explore setting up of coal to synthetic natural gas project at WCL through Surface Coal Gasification,” the coal miner said in a stock exchange filing.

Nod from CIL board

The sources cited above said the pre-feasibility report for the project was prepared by Projects & Development India (PDIL) and got the in-principle approval from the Coal India board. “This is the third coal gasification project that CIL is collaborating with the Maharatna PSU. The other two projects are with BHEL and GAIL, where joint venture agreements have been signed,” they added.

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Synthetic natural gas (SNG) is the final product of the project, considering the availability of the proposed Mumbai to Nagpur gas pipeline. Presently, most of the natural gas demand in India meets with the import of LNG.

In order to reduce the amount of LNG that is imported, this project is in line with the National Gasification Mission of the Central Government, and it would give a boost to the Atamnirbhar Bharat Abhiyaan.

Coal production up

In a separate stock exchange filing, Coal India said its overall coal production in the month of November increased marginally by 1.7 per cent year-on-year to 67.2 million tonnes (mt) compared to the same month last year. Offtake in the last month grew only 0.03 per cent y-o-y at 63 mt.

During the April-November period total production increased by 2.4 per cent y-o-y at 471 mt, while offtake during the period grew 1.5 per cent y-o-y at 492.6 mt.

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