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Neyveli Lignite, GAIL mull venture for underground lignite gasification projects

According to reports, public sector companies Neyveli Lignite Corporation (NLC) and GAIL (India) Ltd are mulling forming a joint venture to undertake underground lignite gasification projects in Tamil Nadu.

Confirming this to Business Line, the Chairman and Managing Director of NLC, Mr A.R. Ansari, said the first formal talks were held by the heads of the two companies last week and they have agreed “in principle” to go ahead. It could take about six months to form the joint venture.

Tamil Nadu has lignite deposits at Neyveli, Jayamkondan, Srimushnam and Mannargudi areas. Other than Neyveli, where lignite mining and power generation has been carried on by NLC for decades, lignite seams in the other areas are deep. Mining the fuel would entail large scale resettlement of population, making projects difficult. The ‘Jayamkondan mining-cum-power project’ has been hanging fire for decades.

Since no technology exists for underground mining of lignite, NLC wants to convert lignite into natural gas and take it out. If taken to fruition, the project would be a major boost for Tamil Nadu, a State that has been waiting in vain for years for gas from the K-G basin.

Not that underground lignite gasification is an art mastered by either of the two PSUs, but both are willing to commit resources to see what could be done. It is not clear how much of investments an underground lignite gasification project would call for. Asked about this, Mr Ansari only pointed out that both NLC and GAIL were cash-rich companies.

NLC has a tie-up with ONGC for undertaking underground lignite gasification in Gujarat, but the venture has got nowhere. NLC intends to go ahead with yet another project, in Rajasthan, and asked the Central Mine Planning and Design Institute Ltd to find a partner.

Incidentally, a company called Great Eastern Energy Corporation is attempting to extract lignite bed methane from Mannargudi. NLC prefers gasfication to methane extraction apparently due to bureaucratic reasons. NLC comes under the Ministry of Coal, while ‘methane’ is under Ministry of Petroleum and Natural Gas.

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