GST reimbursement likely for gasifying coal

NEW DELHI: Companies that respond to the government’s plan to gasify coal may be reimbursed the goods and services tax that they pay on buying coal, said two people aware of the development amid a cool response by investors.

Last year, the Centre announced an ambitious plan to gasify 100 million tonnes of coal by 2030, but it is yet to gain momentum because companies do not see it as economically viable.

As a result, some new incentives are likely to be announced in the next six months, said the people cited above.

“The government will invite private investors for coal gasification and new incentives, including GST reimbursement, assured coal supplies from Coal India Ltd as in the power sector, among others. The idea is to provide support towards capital cost and taxes. We may reimburse the GST on the coal used for gasification,” said one of the two persons.

The government previously considered waiving the GST compensation cess of ₹400 a tonne of coal used for gasification. After lukewarm interest, the Centre is now considering full reimbursement of the GST paid for coal used in gasification.

Another factor behind the development is that three proposed joint ventures of Coal India that were to produce gas from coal have not progressed as anticipated, the second person said.

Coal India had signed three separate memorandum of understanding (MoU) in October with state-run Bharat Heavy Electricals Ltd (BHEL), Indian Oil Corp. Ltd (IOCL) and GAIL (India) Ltd.

“The proposed total investment in these joint ventures is ₹44,000 crore. Although there has been slow progress, it may gain momentum soon, as inter-departmental talks are underway to remove the obstacles and set the ball rolling,” said the person,