**Executive Summary**
On April 1, 2026, Bharat Coal Gasification and Chemicals Limited (BCGCL) and Mahanadi Coalfields Limited (MCL) signed a landmark land leasing agreement for a 2000 TPD Coal to Ammonium Nitrate Project in Lakhanpur, Odisha. This ₹25,000 crore project, enabled by recent policy reforms regarding Coal Bearing Area (CBA) land, marks India’s first coal gasification initiative to use indigenous technology developed by BHEL. Key objectives include reducing import dependency and accelerating the national coal gasification roadmap through a "whole-of-government" approach.
**Key Points / Main Content**
**Project Specifications and Technology**
* The project is designed as a Coal to 2000 TPD (Tons Per Day) Ammonium Nitrate facility.
* It is the first project in India to deploy indigenously developed gasification technology by Bharat Heavy Electricals Limited (BHEL).
* The facility will be situated on approximately 350 acres of land currently in the possession of MCL.
**Financial and Policy Framework**
* The project is supported by a ₹1,350 crore grant under the Ministry of Coal’s financial incentives scheme.
* It falls under a broader Cabinet-approved outlay of ₹8,500 crore intended to promote seven coal gasification projects nationwide.
* The agreement was made possible by policy reforms allowing the utilization of CBA land for coal gasification to diversify the sector.
**Contractual and Operational Status**
* Lump Sum Turnkey (LSTK) packages LSTK-1 and LSTK-2 have been awarded to BHEL.
* LSTK-3 and LSTK-4 packages have been awarded to Larsen & Toubro.
* On-site development is underway, including tree enumeration and boundary wall construction.
* Statutory clearances, Letters of Award (LOAs), and tender processes have reached advanced stages to ensure timely execution.
**Strategic Goals**
* **Atmanirbharta:** Enhancing self-reliance by reducing dependence on imported technologies and chemicals.
* **Economic Impact:** Conserving foreign exchange and promoting value-added utilization of domestic coal reserves.
* **Transparency:** The Ministry launched an official BCGCL website to serve as a centralized hub for project updates, tenders, and stakeholder engagement.
**Impact Analysis**
**BCGCL (Bharat Coal Gasification and Chemicals Limited)**
**Impact**
As the primary project proponent, BCGCL secures the land necessary for its first indigenous project, involving a significant investment of ₹25,000 crore.
**Action Required**
Must maintain a strong sense of ownership, ensure timely escalation of implementation issues, and utilize the new official website for transparent reporting.
**MCL (Mahanadi Coalfields Limited)**
**Impact**
MCL facilitates the diversification of the coal sector by providing 350 acres of its CBA land for non-conventional, value-added use.
**Action Required**
Coordinate effectively with BCGCL and the Ministry of Coal to ensure the successful implementation of the land lease agreement.
**BHEL and Larsen & Toubro**
**Impact**
These entities are the primary contractors responsible for the project's technical and structural execution through LSTK packages.
**Action Required**
Adhere to strict project timelines and focus on completing construction and technology deployment ahead of the stipulated schedule.
**Ministry of Coal and Inter-ministerial Bodies**
**Impact**
The government is driving the transition toward coal gasification to meet "Viksit Bharat" goals and reduce national import dependency.
**Action Required**
Ensure a coordinated approach among the Ministry of Heavy Industries, Ministry of Commerce, and MoEF&CC to provide continued policy and environmental clearance support.
Key Entities Referenced
Bharat Coal Gasification and Chemicals Limited (BCGCL): The primary entity implementing India’s first indigenous coal gasification project with a projected investment of ₹25,000 crore.
Mahanadi Coalfields Limited (MCL): The coal-producing entity providing 350 acres of land and signatory to the landmark land leasing agreement for the project.
Coal to Ammonium Nitrate Project, Lakhanpur, Odisha: A 2000 TPD facility and key industrial initiative intended to reduce import dependency and advance India’s coal gasification roadmap.
Ministry of Coal: The primary regulator driving sector diversification through financial incentives, such as the ₹8,500 crore outlay for coal gasification.
Coal Bearing Area (CBA) land reforms: Policy reforms enabling the utilization of coal-bearing land for coal gasification projects and value-added resource utilization.
Ministry of Coal
BCGCL and MCL Sign Landmark Land Leasing
Agreement for Coal to Ammonium Nitrate Project
at Lakhanpur, Odisha
Posted On: 01 APR 2026 6:08PM by PIB Delhi
In a major step towards advancing India’s coal gasification roadmap, a landmark land leasing agreement
was signed between Bharat Coal Gasification and Chemicals Limited (BCGCL) and Mahanadi Coalfields
Limited (MCL) for the upcoming Coal to Ammonium Nitrate Project at Lakhanpur, Odisha. The signing
ceremony was held in New Delhi today in the august presence of the Union Minister of Coal and Mines
Shri G Kishan Reddy.
The project, envisaged as a Coal to 2000 TPD Ammonium Nitrate facility, marks a historic breakthrough
as India’s first coal gasification project to deploy indigenously developed gasification technology by
Bharat Heavy Electricals Limited (BHEL). It reflects a decisive shift towards indigenous innovation,
technological advancement, and reduced dependence on imported technologies in the energy and chemical
sectors.
Spread over approximately 350 acres of land under the possession of MCL, the project has been enabled
through recent progressive policy reforms of the Ministry of Coal. These reforms enable the utilisation of
Coal Bearing Area (CBA) land for coal gasification projects, unlocking new pathways for value-added
utilisation of India’s abundant coal resources and strengthening the sector’s diversification.Reinforcing its commitment to promoting coal gasification, the Ministry of Coal has extended financial
support of ₹1,350 crore under its dedicated financial incentives scheme. The project is already witnessing
strong momentum on the ground, with major LSTK (Lump Sum Turnkey) packages, LSTK-1 and LSTK-
2, having been awarded to BHEL, while LSTK-3 and LSTK-4 have been awarded to Larsen & Toubro.
Simultaneously, site development works, including boundary wall construction and tree enumeration, are
progressing in parallel, ensuring adherence to timelines.
Addressing the gathering at the signing ceremony of the land lease agreement, Union Minister of Coal &
Mines, Shri G. Kishan Reddy, emphasised that, in line with the Prime Minister’s vision of Atmanirbhar
Bharat, the Government is driving focused initiatives to transform the coal sector. Highlighting that India
is endowed with abundant coal reserves, he underscored the imperative to harness this resource beyond
conventional use through large-scale adoption of coal gasification.
He informed that the Cabinet has approved an outlay of ₹8500 crore to promote coal gasification, with 7
projects already finalized, including 3 where bhoomi pujan has been completed. Describing the land lease
agreement between MCL and BCGCL, with an investment of about ₹25,000 crore, as a significant step
forward, he noted that it marks the first indigenous project of BCGCL and reflects the growing momentum
in this sector.
The Minister asserted that coal gasification will be a game-changer, with the potential to significantly
reduce import dependency and conserve valuable foreign exchange. He emphasised the need to adopt the
best global technologies while simultaneously strengthening indigenous capabilities, assuring full
Government support. Emphasising a whole-of-government approach, he highlighted the coordinated role
of Ministries including MoEF&CC, Ministry of Heavy Industries, and Ministry of Commerce, and urged
industry, investors, and stakeholders to actively participate. He also called for expeditious implementation
of the project, with a focus on completing it ahead of schedule.Addressing the gathering, Shri Vikram Dev Dutt, Secretary, Ministry of Coal, termed the signing of the
land lease agreement between BCGCL and MCL a landmark milestone in advancing coal gasification in
the country. He emphasised that in the present global scenario, there is a need to accelerate efforts towards
Atmanirbharta and strengthen domestic capabilities.
Shri Dutt noted that all key enablers, including statutory clearances, Letters of Award (LOAs), and tender
processes, are in place and have reached advanced stages, positioning the project for timely execution.
Describing it as a potential model for indigenous development with a competitive cost structure, he urged
all stakeholders to work with a strong sense of ownership, ensure timely escalation of issues, and
demonstrate effective coordination among PSUs for the successful implementation of the project.
On this occasion, the Minister also inaugurated the official website of BCGCL, marking a step forward in
enhancing transparency, accessibility, and stakeholder engagement. The platform will serve as a
centralised hub for disseminating key information, including project updates and tenders, fostering greater
openness in project implementation.The signing of this lease agreement is expected to significantly accelerate project execution and ensure
timely completion within the stipulated schedule. The Coal to Ammonium Nitrate Project at Lakhanpur is
an important industrial initiative that reflects India’s progress in technology, policy reforms, and efforts
towards achieving self-reliance, while contributing to the nation’s long-term industrial growth and
economic resilience.
In the present global scenario, marked by evolving geopolitical dynamics and supply chain uncertainties,
such initiatives assume greater significance in strengthening domestic capabilities. The project aligns with
the vision of Viksit Bharat, focusing on innovation, resource efficiency, and sustainable industrial
development. It reinforces India’s commitment to reducing import dependence, enhancing value addition
to its natural resources, and building a resilient, future-ready economy.
*****
Shuhaib T
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