New Delhi — Bharat Coal Gasification and Chemicals Limited (BCGCL) and Mahanadi Coalfields Limited (MCL) signed a land leasing agreement in New Delhi for a coal-to-ammonium nitrate facility at Lakhanpur in Odisha’s Jharsuguda district, marking a formal step forward in India’s push to commercialise indigenous coal gasification technology.
The signing ceremony was held in the presence of Union Minister of Coal and Mines G. Kishan Reddy. The project, structured as a 2,000 tonnes per day (TPD) ammonium nitrate facility, carries an estimated project cost of approximately ₹11,782 crore, according to publicly available project disclosures. The Ministry of Coal has committed financial support of ₹1,350 crore under its dedicated coal gasification incentives scheme. This constitutes a budgeted financial commitment; disbursement and conditions attached to the incentive have not been separately detailed in available public documents.
Project Structure and Ownership
BCGCL is a joint venture between Coal India Limited (CIL), which holds a 51 per cent stake, and Bharat Heavy Electricals Limited (BHEL), which holds the remaining 49 per cent. The project will use surface coal gasification (SCG) technology developed indigenously by BHEL, drawing on high-ash coal feedstock sourced from MCL’s Lakhanpur Area. The plant is designed to produce 0.66 million metric tonnes per annum (MMTPA) of technical-grade ammonium nitrate, intended primarily for use as an explosive in coal mining operations.
The approximately 350 acres of land on which the facility will be developed is under MCL’s possession and falls within coal-bearing area (CBA) land, utilisation of which for coal gasification projects has been enabled through recent policy amendments by the Ministry of Coal.
BCGCL and MCL Sign Landmark Land Leasing Agreement for Coal to Ammonium Nitrate Project at Lakhanpur, Odisha
✴️The project, envisaged as a Coal to 2000 TPD Ammonium Nitrate facility, marks a historic breakthrough as India’s first coal gasification project to deploy indigenously… pic.twitter.com/YHM7iDh0Kt
— PIB India (@PIB_India) April 1, 2026
Contracts Awarded and Construction Status
According to information presented at the signing ceremony, major lump-sum turnkey (LSTK) packages for the project have been awarded. LSTK-1 and LSTK-2 have been awarded to BHEL, with the Syngas Purification Plant package (LSTK-2) valued at approximately ₹2,800 crore, for which BHEL has received a Letter of Acceptance. LSTK-3 and LSTK-4 have been awarded to Larsen and Toubro.
Site development activities, including boundary wall construction and tree enumeration, are described as progressing in parallel with contract execution. M/s PDIL has been designated as the Project Management Consultant for preparation of the Detailed Feasibility Report. The commissioning timeline for the project is indicated as approximately FY2029-30, though this represents a projected target and is subject to execution progress, regulatory clearances, and other variables.
Ministry of Coal Secretary Vikram Dev Dutt, addressing the signing ceremony, stated that statutory clearances, Letters of Award, and tender processes have reached advanced stages. His remarks, as conveyed through the official account of the event, characterised the project as positioned for timely execution, while also calling on stakeholders to ensure effective coordination and timely escalation of issues — an acknowledgement that execution risks remain.
Policy Context and Strategic Rationale
The Ministry of Coal has, according to the ministerial address at the ceremony, secured Cabinet approval for an outlay of ₹8,500 crore to promote coal gasification across multiple projects. Of seven projects finalised under this framework, three have had groundbreaking ceremonies conducted. The Lakhanpur project is described as the first among BCGCL’s initiatives to deploy indigenously developed gasification technology.
The strategic rationale articulated by the government centres on reducing India’s import dependence for technical-grade ammonium nitrate, a chemical used extensively in the mining sector. By producing this material domestically using domestic coal and domestically developed technology, the project is positioned within the broader Atmanirbhar Bharat policy framework.
Minister G. Kishan Reddy, in his address at the signing ceremony, described coal gasification as having the potential to reduce import dependency and conserve foreign exchange, while emphasising the need to adopt global best practices alongside strengthening indigenous capabilities. He also called for the project to be completed ahead of schedule, though no revised or accelerated timeline was formally announced.
The minister noted that the total investment associated with the land lease agreement between MCL and BCGCL — a figure he cited as approximately ₹25,000 crore in his address — is broader than the ₹11,782 crore project cost figure cited in project documentation. The basis for the higher figure was not separately clarified in available public records, and readers should note this discrepancy without inferring a revision to the project’s formally disclosed cost estimate.
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Technology and Industrial Significance
The deployment of BHEL’s indigenous gasification technology at commercial scale is a stated objective of the project and, if successfully executed, would represent a notable development in India’s industrial technology landscape. Previous coal gasification projects in India have predominantly relied on imported technology platforms. The Lakhanpur project’s use of domestically developed technology is therefore significant from an industrial policy standpoint, though commercial-scale validation of indigenous gasification technology at 2,000 TPD capacity has not yet been demonstrated. The project’s commissioning, expected around FY2029-30, will be the point at which the technology’s commercial performance can be assessed.
The ammonium nitrate produced at the facility is classified as technical-grade and is earmarked for explosive applications in coal mining, rather than for agricultural use. This distinguishes the project’s output market from the fertiliser sector, placing it within the mining inputs supply chain where India currently relies on imports to meet a portion of demand.
Transparency and Institutional Accountability
The signing ceremony also included the inauguration of BCGCL’s official website, described as a centralised platform for project updates, tender information, and stakeholder communication. This is an announced initiative; the extent to which the platform will operationally serve transparency objectives will depend on the regularity and completeness of disclosures made through it over time.
The project’s formal progress — from joint venture incorporation through land acquisition, contract award, and now land lease execution — represents a substantive sequence of institutional steps. However, as with large infrastructure projects of this scale and complexity, the gap between signed agreements and operational outcomes involves significant execution risk, regulatory coordination across multiple ministries, and adherence to construction and commissioning timelines spanning several years.
Ministry of Coal Secretary Dutt’s call for stakeholders to work with a strong sense of ownership and to coordinate effectively among public sector units reflects an awareness that institutional alignment across CIL, BHEL, MCL, Larsen and Toubro, and multiple government ministries will be necessary to deliver the project within its indicated timeframe.
What Remains to Be Established
While the land lease agreement represents a formal and documentable milestone, several elements of the project’s full scope remain to be confirmed through execution. These include the completion of the Detailed Feasibility Report by PDIL, the progression of remaining statutory clearances, the performance of indigenous gasification technology at the planned commercial scale, and actual disbursement of the Ministry of Coal’s committed ₹1,350 crore incentive. The commissioning target of FY2029-30 should be understood as a projected timeline at this stage.
Statements attributed to Union Minister G. Kishan Reddy and Ministry of Coal Secretary Vikram Dev Dutt are drawn from the official account of the land lease signing ceremony held in New Delhi. Project cost and technical figures are sourced from publicly available project disclosures and official communications related to BCGCL and the Lakhanpur Coal-to-Ammonium Nitrate Project.