The Fertiliser Ministry has asked the Coal Ministry to give priority to the farm-nutrient sector while allocating mines for underground coal gasification, saying it will reduce cost of production and bring down government subsidy.

“Priority in allocation of coal blocks for UCG (Underground Coal Gasification) should also be given to the fertiliser sector so that the cost of production is low and the subsidy on subsidised fertilisers is reduced,” said an internal note of the Coal Ministry.

The fertiliser industry is a “priority sector” in allocation of domestic gas as well, Fertiliser Ministry said. The Coal Ministry has invited comments from various ministries on the proposed policy on UCG. It had said that “since the approval to invite applications is through global bidding, anyone can participate.”

UCG is a method of converting unmined coal into a combustible gas that can be used for various purposes, including power generation.

The Coal Ministry had earlier this year moved a CCEA (Cabinet Committe on Economic Affairs) note on the proposed policy.

After the policy is finalised, the blocks for coal gasification would be identified and expression of interest would be invited for them from companies.

Coal Minister Sriprakash Jaiswal had also earlier sought cooperation of countries like South Africa for underground coal gasification technologies.

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