Coal India enters into JV with BHEL to undertake coal-to-chemicals business

State-owned Coal India Ltd (CIL) on Wednesday said it has signed a joint venture agreement with BHEL to undertake the coal to chemicals business.

The joint venture (JV) will begin by setting up a 2000 TPD (tonne per day) ammonium nitrate plant using BHEL's PFBG (Pressurized Fluidized Bed Gasification) technology.

"To form a Joint Venture Company to undertake Coal to Chemicals business by initially setting up a Coal to 2000 TPD Ammonium Nitrate Plant using BHEL’s in-house developed PFBG (Pressurized Fluidized Bed Gasification) technology," the company said in an exchange filing.

The purpose of this venture is to leverage BHEL's in-house developed technology for gasification of coal, which is a key process for the conversion of coal into various value-added products, including chemicals.

Under the agreement, the ownership of the joint venture company will be 51% with Coal India and 49% with BHEL. The initial paid-up share capital of the company will be ₹1 lakh, and the registered office will be located in the state of Odisha, India.

The Board of Directors of the joint venture company will consist of six members, three nominated by BHEL and three by Coal India.

One of the key terms of the agreement is that BHEL and the joint venture company will collaborate on a "coal to syngas island/gasification plant" project on a Lump Sum Turn Key (LSTK) basis, using BHEL's PFBG technology. This project will be executed after the finalisation of a Detailed Feasibility Report (DFR).

"CIL to ensure offtake of at least 75% of rated annual production capacity of the Project, envisaged in the Pre-Feasibility Report (PFR), subject to acceptance of quality and prices on mutually acceptable terms, as agreed after finalization of DFR," the company added.

Shares of Coal India Ltd ended at ₹434.30, down by ₹7.00, or 1.59% and Bharat Heavy Electricals Ltd's shares ended at ₹224.65, up by ₹1.70, or 0.76% on the BSE.