GAIL India plans to set up a set up a coal gasification project at an investment of Rs2,400 crore to produce coal gas for Rashtriya Chemicals and Fertilizers (RCF) to set up a fertiliser plant at Talcher in Orissa.

The two public sector companies signed a memorandum of agreement to this effect today under which GAIL would conduct a techno-economic study for setting up the commercial coal gasification plant for production of synthesis gas, while RCF will carry out the techno-economic study for setting up a fertilizer plant by utilising the synthesis gas from the proposed coal gasification plant.

Speaking on the occasion, Dr U D Choubey, chairman and managing director, GAIL India, referred to the critical role of fertilisers in a predominantly agricultural country and the imperative of providing this input to the farmers at a reasonable price. Gas, he said, had always been a preferred feedstock for fertilisers but there was a large demand supply gap of natural gas and therefore considerable efforts are on to locate alternate sources of energy.

Surface coal gasification, he said, provides a promising alternate source of gas which can also meet the feedstock requirement of the fertilizer industry. This was recognised by both RCF and the company and he was confident that the project would be a success.

The project would entail an investment of around Rs2,400 crore for setting up the coal gasification plant.

GAIL had earlier commissioned Udhe India to conduct a study for examining the potential of the project, which had estimated that the project would help produce 7.76 MMSCMD of synthesis gas equivalent to 3000 tonnes per day of ammonia and 3500 tonnes per day of urea.

GAIL will focus on the production and marketing of synthesis gas which will be in line with its core function of gas handling.

Both the companies will also jointly evaluate the potential of coal gasification for the fertiliser industry and provide assistance to each other for successful implementation of respective projects.