BHEL–Coal India Joint Venture Begins Construction of ₹25,016 Crore Indigenous Coal Gasification Project in Odisha

India has reached an important milestone in its indigenous coal gasification programme, with Bharat Coal Gasification and Chemicals Limited (BCGCL), a joint venture between Coal India Limited and Bharat Heavy Electricals Limited (BHEL), commencing construction of its ₹25,016 crore integrated coal-to-ammonium nitrate project at Lakhanpur in Odisha’s Jharsuguda district. The project represents one of India’s major initiatives to convert domestic coal into valuable industrial chemicals using indigenously developed technology.

BCGCL Managing Director Peeyush Kumar confirmed the commencement of construction during the 17th edition of Gasification India 2026, held in New Delhi on October 22, 2026. He announced that the company had awarded contracts worth approximately ₹15,000 crore, with BHEL and Larsen & Toubro undertaking major engineering and construction packages. The development marks the project’s transition from planning and procurement to physical implementation.

The facility will employ BHEL’s indigenous Pressurised Fluidised Bed Gasification technology to produce synthesis gas, which will subsequently serve as a feedstock for manufacturing technical-grade ammonium nitrate. Once operational, the integrated complex is designed to produce approximately 6.6 lakh tonnes of ammonium nitrate annually. The project is scheduled for commissioning by September 2029 and forms part of India’s broader effort to strengthen domestic chemical manufacturing and reduce dependence on imported industrial feedstocks.

BCGCL Begins Construction of Major Coal-to-Chemicals Complex at Lakhanpur

Bharat Coal Gasification and Chemicals Limited has initiated construction activities at the proposed industrial complex in the Lakhanpur area of Jharsuguda district. The project is being developed in a major coal-producing region associated with Mahanadi Coalfields Limited, a subsidiary of Coal India. Its proximity to domestic coal resources is expected to support the availability of feedstock required for continuous gasification and downstream chemical production.

Addressing Gasification India 2026, BCGCL Managing Director Peeyush Kumar confirmed that construction had commenced and that contracts for most major project packages had already been awarded. The announcement marks progress towards establishing one of India’s first commercial-scale facilities designed to manufacture ammonium nitrate through indigenous coal gasification technology.

The integrated industrial complex will comprise several interconnected facilities responsible for coal preparation, gasification, synthesis gas cleaning, ammonia production and ammonium nitrate manufacturing. Supporting infrastructure will include material-handling equipment, process utilities, electrical systems and other facilities essential for operating a large chemical manufacturing complex.

The commencement of construction follows the completion of important preparatory activities, including the establishment of the joint venture, government approvals, land arrangements, engineering development and procurement planning. These activities have provided the administrative and technical foundation required for implementing the project.

BHEL and Larsen & Toubro Receive Major Engineering Contracts Worth ₹15,000 Crore

BCGCL has awarded contracts valued at approximately ₹15,000 crore for the Lakhanpur coal gasification project. According to the company’s Managing Director, BHEL has received work worth around ₹10,000 crore, while Larsen & Toubro has secured contracts valued at approximately ₹5,000 crore. These packages cover major industrial systems required for converting coal into technical-grade ammonium nitrate.

BHEL is responsible for the coal gasification and synthesis gas purification facilities, which form the technological foundation of the project. The company’s responsibilities include developing the systems required to convert coal into synthesis gas and remove impurities before the gas enters the downstream chemical manufacturing units. These operations are essential for ensuring that the intermediate gas meets the quality requirements of subsequent industrial processes.

Larsen & Toubro will undertake major packages associated with ammonia synthesis and ammonium nitrate production. These downstream facilities will process the prepared synthesis gas into ammonia and subsequently manufacture the final chemical product. The integration of these units with BHEL’s gasification system will be central to achieving the plant’s designed production capacity.

The participation of BHEL and Larsen & Toubro demonstrates the capabilities of Indian engineering companies in implementing large, technologically complex industrial projects. Their involvement also provides opportunities for domestic manufacturers and specialised suppliers to participate in equipment manufacturing, construction, electrical engineering, instrumentation and industrial services.

Indigenous Pressurised Fluidised Bed Gasification Technology Forms the Core of the Project

The Lakhanpur facility will use Pressurised Fluidised Bed Gasification (PFBG) technology developed by Bharat Heavy Electricals Limited. The technology represents a significant component of India’s efforts to establish indigenous expertise in converting coal into industrially useful gases and chemicals.

Coal gasification differs from conventional coal combustion because it converts solid fuel into a gaseous intermediate rather than using it primarily to generate heat. In the gasification process, coal reacts with controlled quantities of oxygen and steam under elevated temperatures, producing a mixture of gases containing hydrogen, carbon monoxide and other components.

In a fluidised bed gasifier, upward-flowing gases suspend and mix solid coal particles, creating conditions that promote interaction between the fuel and the gasifying agents. Operating the system under pressure supports the gasification process and enables the resulting synthesis gas to undergo further treatment for industrial applications.

BHEL has developed its PFBG technology through indigenous research and engineering efforts. The Lakhanpur project represents its first commercial-scale deployment for the production of ammonium nitrate through an integrated coal-to-chemicals process. The facility will therefore provide an important opportunity to demonstrate the technology’s performance, reliability and suitability for large industrial applications.

In January 2026, BHEL announced that it had secured the coal gasification and raw synthesis gas cleaning package for the BCGCL project. The scope includes engineering, procurement, construction, commissioning and performance guarantees. Successful implementation will strengthen domestic expertise in designing and manufacturing sophisticated coal conversion systems.

How Coal Gasification Converts Domestic Coal into Industrial Chemicals

Coal gasification is a thermochemical process that converts solid coal into synthesis gas, commonly known as syngas. The resulting gas mixture contains components that can be processed into a variety of industrial products, including ammonia, methanol, synthetic natural gas and other chemicals.

The process begins with the preparation of coal to meet the requirements of the gasification system. The prepared coal enters a gasifier, where controlled reactions involving oxygen and steam produce a mixture containing hydrogen and carbon monoxide. The raw gas also contains impurities and other substances that must be removed before it can be used in chemical manufacturing.

The synthesis gas subsequently passes through treatment and purification systems. Depending on the intended chemical product, these processes may include particulate removal, sulphur removal, gas conditioning and adjustments to the composition of the gas mixture.

At Lakhanpur, the processed synthesis gas will provide the basis for producing ammonia. The ammonia will then undergo additional chemical processing to manufacture technical-grade ammonium nitrate, which is widely used in industrial applications.

This approach creates an alternative route for manufacturing important industrial chemicals using domestic coal resources. It also provides opportunities for India to develop specialised engineering capabilities in gasification, gas purification, chemical synthesis and integrated process operations.

Lakhanpur Project Designed to Produce 6.6 Lakh Tonnes of Ammonium Nitrate Annually

The integrated BCGCL facility is designed to produce approximately 2,000 tonnes of technical-grade ammonium nitrate per day, corresponding to an annual production capacity of around 6.6 lakh tonnes. The proposed output represents a substantial addition to India’s domestic capacity for manufacturing this important industrial chemical.

Technical-grade ammonium nitrate is used extensively in the mining and quarrying industries, particularly in the manufacture of commercial blasting products. These materials support mineral extraction, infrastructure construction and other industrial activities requiring controlled blasting operations.

India’s mining sector depends on reliable supplies of industrial explosives and associated chemical feedstocks. Expanding domestic ammonium nitrate production can help strengthen the supply chain supporting coal mining, mineral extraction and major infrastructure projects.

The Lakhanpur facility seeks to address this requirement by combining domestic coal resources with indigenous gasification technology and chemical manufacturing processes. Its integrated design will allow coal-derived synthesis gas to serve as the principal intermediate feedstock for producing the final chemical product.

The announced capacity represents the plant’s intended annual production after commissioning and operational stabilisation. Actual output will depend on the successful completion of construction, equipment testing, commissioning and the establishment of reliable operating conditions across the integrated facility.

Mahanadi Coalfields to Supply Coal and Washery Rejects for Gasification

Mahanadi Coalfields Limited, a subsidiary of Coal India, is expected to play an important role in supplying feedstock to the Lakhanpur project. The proposed arrangements envisage the annual supply of approximately 0.79 million tonnes of washed coal and 1.19 million tonnes of washery rejects.

Washed coal undergoes beneficiation to reduce certain impurities and improve its suitability for industrial applications. Washery rejects are materials separated during coal preparation that may retain combustible components. Appropriate gasification technologies can provide opportunities to utilise suitable materials that would otherwise have more limited industrial applications.

The availability of these feedstocks from an established coal-producing region provides an important logistical advantage for the proposed chemical complex. It also supports closer coordination between mining operations, coal preparation facilities and downstream industrial manufacturing.

The use of domestic coal and suitable washery rejects reflects the project’s objective of generating additional industrial value from India’s mineral resources. The arrangement is intended to support efficient feedstock utilisation while developing a more integrated relationship between coal production and chemical manufacturing.

The performance of the facility will depend on maintaining consistent feedstock quality, reliable supply arrangements and appropriate control of the gasification process. These considerations will remain central to achieving the project’s intended production capacity.

Coal India and BHEL Establish Joint Venture to Develop Indigenous Gasification

Bharat Coal Gasification and Chemicals Limited was incorporated on May 21, 2024, as a joint venture between Coal India Limited and Bharat Heavy Electricals Limited. Coal India holds a 51% equity stake in the company, while BHEL owns the remaining 49%.

The partnership combines Coal India’s extensive experience in coal mining and resource management with BHEL’s engineering capabilities and indigenous gasification technology. Together, the companies aim to develop industrial facilities capable of converting domestic coal into higher-value chemical products.

Coal India brings expertise in coal production, resource planning and the development of large industrial projects. BHEL contributes experience in heavy engineering, industrial equipment manufacturing, energy systems and the design of specialised process technologies.

The establishment of BCGCL reflects the government’s efforts to encourage public sector cooperation in technologically demanding industrial projects. By combining complementary capabilities, the joint venture seeks to develop commercial applications for indigenous coal gasification technologies.

The Lakhanpur facility represents a major project undertaken through this partnership. Its successful implementation can provide experience relevant to future coal-to-chemical manufacturing ventures in India.

Foundation Stone Laid in June 2026 Following Land Agreement

The Lakhanpur project progressed through several important administrative and industrial milestones before construction activities commenced in October 2026.

On April 1, 2026, BCGCL and Mahanadi Coalfields Limited signed a land leasing agreement for the proposed coal-to-ammonium nitrate complex. The agreement was concluded in the presence of Union Minister of Coal and Mines G. Kishan Reddy and established an important requirement for developing the project at the selected location.

The foundation stone of the facility was subsequently laid on June 20, 2026, during a ceremony involving President Droupadi Murmu and Prime Minister Narendra Modi. The event formally marked the advancement of the project towards its implementation phase.

The Ministry of Coal described the proposed facility as India’s first commercial-scale coal gasification project using BHEL’s indigenous technology for this industrial application. The announcement highlighted the government’s emphasis on developing domestic capabilities in coal conversion and chemical manufacturing.

The October 2026 confirmation of ground construction demonstrates the project’s progression beyond preparatory activities. The commencement of physical work follows the completion of important approval, procurement and land-related requirements necessary for implementing an industrial facility of this scale.

Government Provides ₹1,350 Crore Support Under Coal Gasification Programme

The Government of India has provided for financial assistance of ₹1,350 crore for the BCGCL project under its coal gasification incentive framework. The support forms part of a wider initiative intended to encourage investment in commercial-scale coal conversion technologies.

Coal gasification projects require substantial capital expenditure because they involve several interconnected process facilities, specialised engineering equipment and extensive industrial infrastructure. In addition to the gasifier, an integrated coal-to-chemicals complex requires gas cleaning, chemical synthesis, utilities, material handling and supporting systems.

The government’s financial assistance is intended to encourage the development of indigenous technologies and support the commercial implementation of gasification projects. Such support can help address some of the financial and technological challenges associated with establishing large industrial facilities.

The Lakhanpur project has an estimated total investment of ₹25,016 crore. The financial assistance represents one component of the overall project funding framework, while the joint venture partners and other approved financing arrangements will support the remaining investment requirements.

The initiative reflects the government’s broader objective of strengthening domestic chemical manufacturing through greater industrial utilisation of India’s coal resources.

Project Supports India’s Target of Gasifying 100 Million Tonnes of Coal by 2030

The Lakhanpur facility forms part of India’s national strategy to promote coal gasification and the manufacture of industrial chemicals from domestic coal.

The Government of India has established a target of gasifying 100 million tonnes of coal annually by 2030. The objective is to expand the industrial applications of coal beyond its conventional use in electricity generation and combustion-based industrial processes.

Coal gasification can provide feedstocks for producing synthetic natural gas, ammonia, methanol and other industrial chemicals. These products are relevant to several sectors, including fertilisers, chemicals, mining and manufacturing.

Coal India has been participating in proposed gasification ventures with other major public sector enterprises to support the development of these capabilities. Such projects seek to create industrial opportunities by integrating coal resources with advanced conversion technologies.

The Lakhanpur project is especially relevant because it will demonstrate BHEL’s indigenous Pressurised Fluidised Bed Gasification technology at commercial scale. Its construction and subsequent operation can generate valuable experience in equipment manufacturing, process integration and large-scale industrial management.

The wider success of India’s coal gasification programme will depend on technological reliability, economic competitiveness, reliable feedstock supplies and compliance with environmental requirements. Projects such as Lakhanpur will provide practical experience in addressing these challenges.

Domestic Coal-to-Chemicals Production Can Strengthen Industrial Supply Chains

India relies on imported natural gas and certain industrial chemicals to meet part of its manufacturing requirements. International price fluctuations and supply disruptions can influence the availability and cost of these materials.

Coal gasification offers an alternative industrial pathway for producing synthesis gas, which can subsequently be converted into ammonia and other chemicals. The Lakhanpur facility seeks to use this process to manufacture technical-grade ammonium nitrate from domestic coal.

The development of domestic coal-to-chemical capacity can contribute to more diversified supply chains for important industrial materials. It can also encourage greater participation by Indian engineering companies, equipment manufacturers and specialised technology suppliers.

At the same time, coal gasification is an energy-intensive process that requires careful management of emissions, water use and industrial waste. The conversion of coal into chemical products generates carbon dioxide, making environmental safeguards and efficient process design important considerations throughout the project’s operational life.

The use of appropriate emissions-control systems, water-management technologies and waste-treatment facilities will therefore form an important part of the project’s environmental performance. Compliance with applicable regulatory standards will remain essential during both construction and commercial operation.

By combining indigenous technology development with responsible industrial practices, India can strengthen domestic manufacturing capabilities while addressing the technical and environmental requirements associated with large-scale coal conversion.

Commercial Commissioning Scheduled for September 2029

The BCGCL coal-to-ammonium nitrate project is scheduled for commissioning by September 2029. The construction programme will involve the installation of major process equipment, structural facilities, mechanical systems, electrical infrastructure, pipelines and supporting utilities.

Following completion of construction, the individual systems will undergo testing and commissioning to establish their readiness for integrated operation. The gasification unit must function reliably with downstream synthesis gas cleaning, ammonia production and ammonium nitrate manufacturing facilities.

The quality and consistency of the synthesis gas will be particularly important because downstream chemical processes depend on receiving feedstock that meets prescribed specifications. Reliable coordination between the different industrial units will be necessary to achieve stable production.

The commissioning programme will also involve safety assessments, equipment performance tests and verification of compliance with applicable industrial and environmental requirements.

The commencement of construction in October 2026 marks an important stage in the project schedule. The transition to commercial production will follow the successful completion of the remaining construction, testing and commissioning activities.

Indigenous Gasification Technology Creates Opportunities for Indian Engineering Companies

The Lakhanpur project brings together major Indian public sector enterprises and private engineering companies in the development of a technologically complex industrial facility.

Coal India, BHEL, Larsen & Toubro and Mahanadi Coalfields contribute complementary capabilities covering coal production, process technology, heavy engineering, industrial construction and feedstock management.

The use of BHEL’s indigenous gasification technology creates opportunities for domestic manufacturers to participate in the production of specialised equipment and supporting systems. These activities can involve precision engineering, fabrication, industrial valves, mechanical assemblies, electrical equipment, instrumentation and process-control technologies.

The project can also provide practical experience in integrating large gasification systems with downstream chemical manufacturing processes. Such expertise is important for developing domestic capabilities in a sector that has traditionally depended on specialised technologies and international engineering support.

Indian suppliers participating in the project may gain experience in meeting the demanding quality and reliability standards associated with large chemical processing facilities.

As domestic expertise expands, these capabilities can support future gasification projects and other industrial applications requiring sophisticated process engineering.

BHEL–Coal India Project Advances India’s Industrial Self-Reliance

The commencement of construction at Lakhanpur represents a significant step in India’s effort to commercialise indigenous coal gasification technology and expand domestic chemical manufacturing.

With an estimated investment of ₹25,016 crore and contracts worth approximately ₹15,000 crore already awarded, the project has entered a major phase of industrial implementation. Its planned annual production of 6.6 lakh tonnes of technical-grade ammonium nitrate will create a substantial new manufacturing facility serving India’s industrial requirements.

The development also demonstrates the value of cooperation between Coal India, BHEL, Larsen & Toubro and Mahanadi Coalfields in implementing complex engineering projects. Their combined capabilities provide a foundation for strengthening India’s domestic industrial supply chains and developing specialised technological expertise.

The commercial-scale deployment of BHEL’s Pressurised Fluidised Bed Gasification technology is a particularly important aspect of the initiative. Successful commissioning and operation will provide a practical demonstration of India’s ability to develop and implement advanced coal conversion technologies using domestic engineering capabilities.

As the project progresses towards its targeted September 2029 commissioning, the Lakhanpur facility will contribute to the development of India’s coal-to-chemicals industry and strengthen the technological foundation of the country’s heavy engineering and manufacturing sectors.

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References

1. Ministry of Coal, Government of India — June 19, 2026.
Prime Minister to Lay Foundation Stone of India’s First Commercial-Scale Coal-to-Ammonium Nitrate Project in Odisha.
Press Information Bureau.
https://www.pib.gov.in/PressReleasePage.aspx?PRID=2275058

2. Ministry of Coal, Government of India — June 20, 2026.
President of India and Prime Minister Lay Foundation Stone of Bharat Coal Gasification & Chemicals Limited Coal-to-Ammonium Nitrate Project at Lakhanpur, Odisha.
Press Information Bureau.
https://www.pib.gov.in/newsite/archiveContent.aspx?lang=2&reg=48&relid=290294

3. Bharat Heavy Electricals Limited — January 8, 2026.
BHEL Secures Coal Gasification Package for BCGCL Project.
https://www.bhel.com/bhel-secures-coal-gasification-package-bcgcl-project

4. Ministry of Coal, Government of India — April 1, 2026.
BCGCL and MCL Sign Landmark Land Leasing Agreement for Coal-to-Ammonium Nitrate Project at Lakhanpur, Odisha.
https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2247912

5. Bharat Heavy Electricals Limited — October 19, 2026.
Civil, Structural and Architectural Works of Coal Handling Plant and Limestone Handling Plant at Lakhanpur, Jharsuguda, Odisha.
https://tenders.bhel.com/bhelcpcjsdcchplhp27046-civil-works-chp-and-lhp-lakhanpur-bcgcl

6. Press Trust of India — October 22, 2026.
BCGCL Starts Construction Work on ₹25,000 Crore Gasification Project; ₹15,000 Crore Work Awarded.
Published by The Economic Times.
https://economictimes.indiatimes.com/industry/energy/oil-gas/bcgcl-starts-construction-work-on-rs-25000-cr-gasification-project-rs-15k-cr-work-awarded/articleshow/135114274.cms

7. Ministry of Coal, Government of India.
National Coal Gasification Programme.
https://coal.gov.in

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