The Indian government seeks to produce methanol and dimethyl ether (DME) from three plants that are set to come on line in the next three years.
The government's move comes as it thinks there is strong potential in coal gasification, advisor to the Prime Minister's Office Tarun Kapoor told Argus on the sidelines of the India Energy Week.
The government last month approved $1bn in financial incentives for such projects in a bid to reduce its reliance on imported fuels and support indigenous technology.
Coal gasification involves extracting methane from coal during the mining process and utilising it for commercial purposes. The total outlay of 85bn rupees ($1bn) will be divided into three categories, India's Cabinet Committee on Economic Affairs (CCEA) announced on 24 January.
Coal India, Indian Oil, Gail, and Bharat Heavy Electricals are the firms that have so far announced plans to build coal-to-chemical projects that will convert coal into syngas, which can be subsequently processed for downstream production of value-added chemicals.
"The government sees strong potential for methanol and DME as the latter can be blended in LPG by up to 20-25pc helping India reduce our import bill," Kapoor said.
India's is one of the world's largest consumers of LPG as it caters to over 310mn of gas connections, he said, adding that DME can also be used in CNG vehicles.
The government is also targeting to blend methanol in gasoline and is also working out if it can be blended in diesel.
The plants are also likely to produce ammonium nitrate that is used in making explosives.
The government is targeting only the domestic market for the sale of these products, as the cost of production of methanol would not be at parity with global prices, Kapoor added.
The government aims to gasify 100mn t of coal by 2030 and envisions the adoption of domestic technologies to produce chemical products and their derivatives, as part of the National Coal Gasification Mission.
The Indian government had estimated in 2020 that it would require an investment of more than Rs4 trillion to gasify 100mn t/yr of coal by 2030.
