Bharat Coal Gasification and Chemicals Ltd (BCGCL) has started ground construction at its ₹25,000 crore coal-to-ammonium nitrate plant at Lakhanpur in Odisha, managing director Peeyush Kumar said on 22 October1.
The joint venture of Coal India, which holds 51%, and BHEL, which holds 49%, has placed about ₹15,000 crore of work. BHEL has ₹10,000 crore of it and Larsen & Toubro the remaining ₹5,000 crore1.
"Out of Rs 25,000 crore, Rs 15,000 crore of work has already been awarded. Of this, Rs 10,000 crore has gone to BHEL and Rs 5,000 crore to L&T," Kumar said at a Gasification India 2026 event1.
Four packages, all placed
The work is split into four major packages, and all four sit with the two contractors. BHEL is executing the coal gasification and syngas purification packages. L&T is handling ammonia synthesis and ammonium nitrate production1.
Kumar said tenders for the remaining works are yet to be awarded, and that the balance of the project cost is soft costs such as interest, depreciation and land1. The plant is designed to produce about 0.66 million tonnes a year of technical grade ammonium nitrate, using pressurised fluidised bed gasification technology developed in India1. Odisha's high-level clearance authority has cleared it through a single window1.
The supplier chain below those main contracts is already visible. In September, Ellenbarrie Industrial Gases said it had won a ₹481 crore order from BHEL to build a 1,200 TPD (tonnes per day) cryogenic air separation unit for the project. The turnkey order runs for eight quarters and is due to be commissioned in FY293.
BCGCL has not stated a commissioning date for the whole plant in the comments reviewed for this article. The air separation unit schedule is the clearest public marker: commissioning in FY293. An industry estimate reported in June said the Odisha plant would meet nearly 35% of India's ammonium nitrate needs by 20304.
What changes for ammonium nitrate buyers
Technical grade ammonium nitrate is the main ingredient in ANFO, the bulk explosive used in coal mining, quarrying, metal mining and civil construction5. In India the construction sector's blasting work is the largest user, and fertiliser makers take part of the volume6.
The first thing for buyers to note is who gets the output. Coal India will take BCGCL's ammonium nitrate for use in mine blasting, according to the Alvarez & Marsal report launched on 22 October2. That makes the plant closer to a captive supplier for the country's largest coal miner than a new merchant seller.
The second is scale. The same industry estimate said the plant would cut ammonium nitrate imports by 0.66 million tonnes a year, saving over $360 million in foreign exchange annually4. Import volumes for technical grade ammonium nitrate were not confirmed in the official trade data reviewed for this article, so that import substitution figure is a projection, not a measurement.
Buyers should also plan for a regulated market. Ammonium nitrate imports have needed prior permission from the Chief Controller of Explosives since 20136.
None of this changes contracts signed for this year. BCGCL's output begins to matter from around FY293, and the industry estimate looks to 20304. BCGCL will not be the only new seller either. New Era Cleantech is building an ammonium nitrate plant in Maharashtra with an outlay above ₹20,000 crore and commercial commissioning targeted for 20307.
The ₹2.5 lakh crore to ₹3 lakh crore tender pipeline
BCGCL is one project in a much larger programme. The coal ministry projects investments of ₹2.5 lakh crore to ₹3 lakh crore across 25 projects to reach the 100 million tonnes gasification target for 2030, according to the A&M report2. BusinessLine reported the same figures8.
The supporting scheme has ₹37,500 crore, approved by the cabinet in May9. It sits on top of an ₹8,500 crore package launched in 2024, taking committed support to ₹46,000 crore across two tranches7.
The import bill behind the mission is large. Imports met about 94% of India's methanol consumption and about 50% of its natural gas consumption in FY25, according to the A&M report. In FY26, natural gas imports were worth about ₹1.18 lakh crore and urea imports about ₹46,000 crore2. Mint, in a report this month, put methanol import dependence at 90% rather than 94%7.
The bidding record is the part vendors should study. On 4 September, a report said the ₹37,500 crore scheme had drawn no applications10. The coal ministry contradicted that the next day, saying Talcher Fertilisers and NTPC had applied10. By 8 September, seven applications were in, three of them from Adani Enterprises for urea projects10. The ministry opened a second round on 9 September10.
For vendors, the qualifying rules are mostly about fuel and finance:
- Fuel is the bidder's problem. Developers arrange their own coal, imported coal is allowed, and there is no domestic supply guarantee10.
- Foreign companies can bid but must set up a local entity if selected10.
- The scheme pays support towards plant and machinery10. The government has also offered 30-year coal linkage10, a 50% revenue-share rebate on coal used for gasification, and infrastructure status for cheaper credit7.
Capital cost is the harder gate. Industry specialists put outlay at about $500 million for each million tonne per annum of gasification capacity7. High ash in Indian coal forces spending on washeries, which inflates budgets7. Coal India itself argued that the first bidding window was too short for state-run firms, and that excluding captive power plants from eligible costs put it at a disadvantage10.
Industry groups have asked for assured offtake, freight support and land near mines or ports10. The A&M report recommends long-term offtake agreements to improve bankability, and single-window approvals with fixed timelines2. It points to India's ethanol programme and the Great Plains plant in the US as offtake models2.
What to watch
First, BCGCL's remaining tenders and a firm commissioning date. The air separation unit is due in FY293, and every later package will be sequenced around that.
Second, whether Coal India sells any ammonium nitrate outside its own mines. The A&M report says the miner will take the plant's output for blasting2, which leaves merchant buyers dependent on imports for longer.