New Delhi, Jan 24 (IANS): The Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved the scheme for promotion of Coal Gasification projects of public sector undertakings and private sector companies with an outlay of Rs 8,500 crore for providing incentives under three categories.

In the first category, Rs 4,050 crore has been earmarked for government PSUs in which up to three projects will be supported by providing lump-sum grant of Rs 1,350 crore or 15 per cent of capex, whichever is lower, an official statement said.

In the second category, Rs 3,850 crore is being allocated for private sector as well as government PSUs in which a lump-sum grant of Rs 1,000 crore or 15 per cent of capex, whichever is lower will be provided for each project. At least one project will be bid out on tariff-based bidding process and its criteria will be designed in consultation with NITI Aayog.

In the third category, Rs 600 crore provisioned for demonstration projects (indigenous technology) and/or small-scale product-based gasification plants under which lump-sum grant of Rs 100 crore or 15 per cent of capex, whichever is lower, will be given to the selected entity who will have a minimum capex of Rs 100 crore and minimum production of 1500 Nm3/hr Syn gas, the statement added.

The selection of entities under category II and III shall be carried out through a competitive and transparent bidding process. The grant will be paid to the selected entity in two equal installments.

An empowered group of secretaries (EGoS) chaired by Secretary Coal will be fully empowered to make any changes required in the modalities of the scheme subject to the condition that overall financial outlay remain within Rs 8,500 crore, according to the official statement.