On 27 July, the government told the Rajya Sabha that eight projects have been approved under its Rs 8,500 crore financial incentive scheme, making everything from synthetic gas to steel, including coal gasification.

A larger scheme had already been introduced in May, and in June the Coal Secretary put projects under execution above Rs 65,000 crore.

Coal gasification is simple. Heat coal with oxygen instead of burning it, and you get a gas that can be made into fertiliser, mining explosives, or a substitute for imported natural gas.

Coal India has the coal, imports are expensive, and on paper it works.

However, nobody seems to have the answer to what the gas would cost to produce, or who would cover the difference if it turns out to cost more than the gas India already imports.

What appears to be a technicality will ultimately determine who foots the bill: the exchequer through the urea subsidy, Coal India through lower margins, banks financing the projects, or no one at all if the two plants, still without buyers, never get built.

Four plants account for most of the state's money: Rs 50,327 crore.

Talcher in Odisha, urea, Rs 13,277 crore. Lakhanpur in Odisha, ammonium nitrate, Rs 11,782 crore. Sonepur Bazari in West Bengal, gas, Rs 13,053 crore. Niljai in Maharashtra, also gas, Rs 12,215 crore, a figure fixed before its feasibility study.

Coal India is in all four, but not in the same role.

It owns 51% of Lakhanpur against BHEL's 49%, partners with GAIL at Sonepur Bazari, and at Niljai has a venture BPCL's board approved in December 2025. At Talcher, it is one of three equal partners, supplying coal rather than running the plant.

The Dates

Talcher is due in December 2027. It was originally due in September 2024.

Coal India's own presentation to investors puts Lakhanpur at 2029 and Sonepur Bazari at 2030, with BHEL's share of Lakhanpur alone scheduled to take 42 months. It gives no date for Niljai.

Set that against the goal. The target is 100 million tonnes of capacity by 2030, and the Coal Ministry says 22.6 million tonnes are operational or under construction.

Those are two different things. Only 8 million tonnes of the 22.6 is operating, and all of it is Jindal's. Talcher's 2.6 million and the scheme projects' 12 million are still under construction.

Four years from the deadline, less than a tenth of the target is running, and it belongs to a company that built it a decade before the scheme.

What Is Not On The Record

The basic facts are scattered across Cabinet press releases, Coal India's investor presentation and Talcher's website. What will not be found is the return the projects expect, the gas price below which they stop earning, or how often they are designed to run.

That last one governs the other two. The capital is spent whether the plant runs or not, so an expected return means nothing until the assumed running rate is known.

None of the four ventures is separately listed, and as joint ventures they are under no obligation to disclose project-level earnings.

Their financials are folded into their parent companies' accounts as investments rather than standalone businesses, making independent assessment difficult.

That's by design, not by omission, as the disclosure was never required, so it was never made.

India is not new to coal gasification. Jindal Steel has run a plant in Odisha’s Angul since 2014, turning high-ash Indian coal into gas for steelmaking. On the government's count, it is about 8 million tonnes, and the only such capacity listed as operational.

It has stopped more than once for want of coal, resuming in 2020 and again in 2023 once Coal India and Mahanadi Coalfields supplied enough of it.

Jindal has published something. A 2022 presentation to the Coal Ministry sets Angul out: seven gasifiers, coal of 34 to 35% ash, 2.4 million tonnes a year.

What it does not give is what a unit of that gas costs. Nobody has published that figure, so all that experience has produced no price anyone can use.

For Coal India’s projects, the Cabinet put Coal India's own contribution at Rs 1,803 crore for Lakhanpur and Rs 1,997 crore for Sonepur Bazari, against its net cash (as of end FY26) of Rs 42,690 crore. It can write those cheques without noticing.

The rest is borrowed, and that is a different question. All four are funded about 70% by debt, so roughly Rs 35,000 crore of the Rs 50,327 crore will be loans, serviced out of whatever the plants earn.

For one project we know who is carrying that. Talcher's Rs 12,250 crore debt package is led by State Bank of India, with eight other public lenders alongside and Rs 4,000 crore from IRFC added last September. Every one of them is state-owned.

The money is public at both ends, and each lender has underwritten a number nobody has published.

One number does get published, though. The Coal Ministry says that once both schemes and Talcher are commissioned, gasification will replace about Rs 1.5 lakh crore of imports a year.

Imports of what, it does not say. The same reply lists synthetic natural gas, chemicals, fertilisers and hydrogen as what gasification produces, so the figure bundles imported LNG, urea and industrial chemicals into a single line with no breakdown behind it.

That is the benefit. The cost is not published anywhere, and a saving means nothing until you take away what it cost to make. So the Rs 1.5 lakh crore is a hope with a rupee sign in front.

The Case Looks Easy. The Numbers Are Borrowed.

It would be simple to say none of this matters, because gas has become expensive.

In late February, Iranian missiles hit Qatar's terminal at Ras Laffan, taking 12.8 million tonnes a year offline for three to five years. Petronet's contract has been suspended, and cargoes in Asia sold at around $20 a unit this week. Indian coal delivers the same energy for a fraction of that.

But nobody has done the sums in public, and the estimates in circulation come from abroad.

An adviser to Pakistan's Sindh government put gas from Thar coal at $7 to $8; a study from MIT, still a reference in America, puts it at $6.70 to $7.50. Neither was measured on coal like India's. Thar is about 18% ash; Indian coal is more than double that.

The ash is the problem. Indian coal runs 30 to 45% of it, and that number drives every design decision. There are two ways to deal with it, and India is paying for both.

Talcher melts it, using Shell technology now owned by Air Products. It is the world's most common method and among the worst suited to Indian coal, because melting rock takes oxygen and oxygen takes electricity.

When Sinopec installed the same equipment at Anqing in 2006, it kept clogging, and the fix was to blend in another coal. Talcher is doing the same, mixing 3.3 lakh tonnes of petroleum coke into 2.5 million tonnes of coal.

Lakhanpur does not melt it, using equipment BHEL developed at Hyderabad. Nor does Jindal, whose presentation says plainly that it chose dry ash removal because Indian ash melts at too high a temperature.

Twelve years of Indian operating experience points one way. Talcher, the state plant furthest along, went the other.

In principle, the dry route is the better answer. The problem is size: BHEL's largest test unit handled 168 tonnes a day, and no full-sized plant uses the design anywhere. Lakhanpur will make 2,000 tonnes of ammonium nitrate a day.

Besides, the advantage may not last: Ras Laffan will likely come back in three to five years, and American supply arrives from 2027-28, before three of these four plants do.

Coal's Costly Tradeoffs

Talcher will sell urea at a government-set price, and was reported at 71% complete early this year. It did not design that arrangement.

It is one of five closed fertiliser plants the Cabinet revived in 2011, and inherited a decades-old subsidy because it was a fertiliser project first. It got coal because it sits on a coalfield.

Lakhanpur has the next best thing: Coal India will use most of the ammonium nitrate itself, replacing an import.

Sonepur Bazari and Niljai have neither. They will sell gas at whatever gas happens to be worth, with no guaranteed price and no contracted buyer. They are also the two that have not moved.

Forecasting a return is not possible if what will be paid is not known.

The Comparison India Already Has

The closest benchmark is already in operation. Ramagundam was conceived under the same 2011 policy, built to the same design and capacity as Talcher.

The only distinction is that it runs on natural gas instead of coal. NFL and EIL built it for Rs 5,254 crore, and it was commissioned in March 2021.

Talcher is the coal version. It costs two and a half times as much and will arrive six years later. That gap is what gasification adds to the cost of building the same plant.

Farmers pay a price for urea that the government fixes; the government pays producers the difference between that price and what the urea cost to make. Therefore, the extra that Talcher cost to build does not come out of Coal India's pocket. It comes out of the subsidy bill, every year the plant runs.

If you own Coal India, GAIL, BHEL or RCF, you own part of a bet nobody has priced for you. If you pay tax, you are behind Rs 46,000 crore of announced incentives and the gap between the coal route and the gas one for the life of the plant. If you are bidding into the Rs 37,500 crore scheme, you are pricing blind.

The Next Round Is Being Priced Now

Last December the Coal Ministry put 41 blocks out to tender, 21 suited to a third method where the coal burns underground. Reliance bid for 17, with Axis Energy. It is the least tested of the three, with a record that includes benzene in groundwater in Australia.

The second scheme, approved in May, is worth Rs 37,500 crore and aims at 75 million tonnes of coal a year.

It is better designed. Projects will be chosen by competitive bidding, benchmarked on project cost, coal input and syngas output. Somebody has worked out that you cannot hand out money without a yardstick.

But that yardstick sits inside the bidding process. It will not be published, and will not be applied backwards to the four plants already being built.

December 2027

When Talcher starts, it will be the first state-owned plant of its kind to run. After eight years of argument, it should settle something.

Yet it might not. Nobody said in advance what it was supposed to earn, how often it was supposed to run, or what Coal India would charge it for coal. Whatever it produces will be called a success, because there is nothing to compare it against.

Say, it runs 70%of the time instead of 90. The capital cost on every tonne rises by about a third, and nobody outside the company will know whether that was the design or a failure.

What does the silence cost? Almost all of it is still ahead. Talcher is nearly built, but Lakhanpur signed its contracts three months ago, and the other two have barely started, so most of the Rs 50,327 crore has yet to be spent. In May, the government put another Rs 37,500 crore of public money behind a second round of projects it has not yet chosen.

All of that gets committed on a result nobody can read; the subsidy that follows runs for as long as the plants do.

Two things would fix it. Publish a forecast for each plant before it starts: the return it expects, the gas price it needs, how often it plans to run, and what happens at $7, $10 or $15 gas. And publish the Ramagundam comparison, which needs no new work.

None of this says the plants are a bad idea. Indian coal is abundant, imported gas is expensive, and the arithmetic may well work. The point is that nobody has been asked to show that it does.

Talcher starts in December 2027. There is still time to say what would count as it having worked.