Coal India-BHEL’s ₹25,000-Crore Coal Gasification Project Enters Construction Phase in Odisha

New Delhi, October 23, 2026: Bharat Coal Gasification and Chemicals Limited (BCGCL), a joint venture between Coal India Limited (CIL) and Bharat Heavy Electricals Limited (BHEL), has commenced construction of its ₹25,000-crore coal gasification project in Odisha, marking a major milestone in India’s efforts to convert domestic coal into value-added industrial chemicals.

The project, located in Lakhanpur in Odisha’s Jharsuguda district, aims to produce approximately 0.66 million tonnes of technical-grade ammonium nitrate annually using coal gasification technology developed in India.

BCGCL Managing Director Peeyush Kumar confirmed that ground-level construction activities have begun and that most major project tenders have been awarded. The update was shared during the 17th edition of Gasification India 2026 in New Delhi on October 22.

₹15,000 Crore Worth of Contracts Awarded

Of the project’s total estimated investment of ₹25,000 crore, contracts worth approximately ₹15,000 crore have already been awarded. BHEL has secured work valued at around ₹10,000 crore, while Larsen & Toubro (L&T) has received contracts worth approximately ₹5,000 crore.

BHEL will execute the coal gasification and synthesis gas purification packages, which form the core of the processing facility. L&T will handle the ammonia synthesis and ammonium nitrate production packages.

The remaining project expenditure includes costs associated with land, interest, depreciation and other project-related expenses.

Indigenous Technology at the Centre of the Project

The facility will use BHEL’s indigenous Pressurised Fluidised Bed Gasification (PFBG) technology to convert coal into synthesis gas, commonly known as syngas. The gas will then be processed into ammonia and subsequently converted into nitric acid and ammonium nitrate.

Technical-grade ammonium nitrate is an important industrial chemical used in mining and other industrial applications. Domestic production could strengthen supply chains for sectors that depend on this material.

The project is among India’s first commercial-scale initiatives to apply domestically developed coal gasification technology for chemical manufacturing.

Coal India to Supply Raw Material

Coal India holds a 51% stake in BCGCL, while BHEL owns the remaining 49%.

Mahanadi Coalfields Limited (MCL), a Coal India subsidiary, will supply the coal required for the facility. According to government information, the project is expected to receive approximately 0.79 million tonnes of washed coal and 1.19 million tonnes of washery rejects annually.

The Odisha government has granted the project single-window clearance, while the Ministry of Coal has approved financial assistance of ₹1,350 crore. The project is targeting commissioning by September 2029.

Supports India’s Coal Gasification Mission

The project forms part of the government’s broader ambition to achieve coal gasification capacity of 100 million tonnes annually by 2030.

Coal gasification converts coal into useful chemical feedstocks, offering an alternative route to producing materials such as ammonia, methanol, fertiliser inputs and synthetic natural gas. The government is promoting the technology to increase the value derived from domestic coal resources and reduce dependence on imported chemicals and industrial feedstocks.

Successful implementation of the Odisha project could provide a model for other commercial coal-to-chemicals facilities across the country.

Outlook: Boost for Domestic Chemical Manufacturing

The commencement of construction represents a significant step towards expanding India’s coal-based chemical manufacturing capabilities. The project is expected to create demand for engineering, construction, equipment manufacturing and associated industrial services.

However, the project’s long-term success will depend on timely execution, cost management, technology performance and market demand for ammonium nitrate.

As India seeks to strengthen industrial self-reliance and reduce import dependence, the Coal India-BHEL venture will be closely watched as a test case for the commercial viability of indigenous coal gasification technology.