Coal-Gasification Firm Seeks Level Playing Field for Coal-Based Urea Projects Compared to Gas-Based Plants

India's Fertiliser Sector Pushes for Domestic Coal-Gasification Route

The Indian government has been urged to place coal-based urea projects on an equal footing with gas-based plants, in a bid to reduce reliance on imported natural gas and leverage the country's vast domestic coal reserves through cleaner gasification technologies.

A Maharashtra-based company, New Era Cleantech Solution, has written to the government to seek parity for coal-based urea projects, including suitable offtake assurance mechanisms and the earmarking of capacities for the coal-gasification route. The representation comes amid a broader government push to diversify feedstock sources for urea production.

The company, which is developing a 5 MMTPA coal gasification project in Chandrapur, has requested the government to consider fiscal incentives and support measures to ensure project viability and encourage greater private-sector participation. The capital cost of coal-based plants is significantly higher than that of gas-based units, with a substantial portion of this expenditure attributable to GST and customs duties on equipment.

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New Era Cleantech Solution Pvt Ltd plans to set up a 1.27 MMTPA coal gasification-based urea project at Bhadravati in Chandrapur district of Maharashtra. Imported LNG is used as feedstock for domestic urea production, with India's fertiliser sector consuming nearly 50 per cent of total imported natural gas and about 28 per cent of the country's total gas usage.

India is one of the largest consumers of urea in the world, with an annual demand of around 40 MMTPA, whereas domestic production is only about 29 MMTPA, resulting in imports of nearly 11 MMTPA last year. The demand-supply gap is fundamentally a feedstock security issue, exposing India to global disruptions, price volatility, and geopolitical risks.

Transitioning to domestic coal-based feedstock ensures a reliable supply, reduces import dependence, stabilises costs, and strengthens both fertiliser security and agricultural resilience. New Era Cleantech Solutions had last month commenced the development of India's first greenfield Integrated Coal Gasification and Carbon Capture Complex at Bhadrawati in Chandrapur, Maharashtra, with an investment of Rs 20,000 crore.

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Note: This table highlights the demand-supply gap in the Indian fertiliser sector, with a total demand of 40 MMTPA and domestic production of 29 MMTPA, resulting in imports of 11 MMTPA last year.