NEW DELHI/JHARSUGUDA: State-owned engineering giant Bharat Heavy Electricals Limited (BHEL) announced on January 8, 2026, that it has secured a prestigious contract worth approximately ₹5,400 crore (excluding GST). The order was awarded by Bharat Coal Gasification and Chemicals Limited (BCGCL), a strategic joint venture between BHEL (49%) and Coal India Limited (51%).
Project Scope: Pioneering Coal-to-Chemicals
The contract involves the execution of the LSTK-1 Package (Lump Sum Turnkey) for a massive coal-to-ammonium nitrate complex located at Lakhanpur in the Jharsuguda district of Odisha.
Under the terms of the agreement, BHEL will be responsible for:
Engineering & Design: Complete design and engineering of the coal gasification and raw syngas cleaning plant.
Infrastructure: Supply of equipment, civil works, erection, and commissioning.
Operational Capacity: The facility is designed to produce 2,000 tonnes per day (TPD) of technical-grade ammonium nitrate.
Maintenance: BHEL will provide Operations and Maintenance (O&M) services for a period of 60 months following the plant’s commissioning.
Technological Milestone
A defining feature of this project is the first-ever commercial-scale deployment of BHEL’s indigenous Pressurised Fluidised Bed Gasification (PFBG) technology. This marks a significant transition for the company from the R&D phase to full-scale commercial execution, supporting India's "National Coal Gasification Mission" which targets gasifying 100 million tonnes of coal by 2030.
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Execution Timeline
The project is slated for completion within a strict timeframe. The preliminary acceptance, which includes the commissioning and performance guarantee tests, is expected to be achieved within 42 months from the date of the Letter of Acceptance (LoA).
Market Impact and Order Book
The win has significantly bolstered BHEL’s already robust order book, which currently stands at over ₹2,19,600 crore. While the news provided a fundamental boost, BHEL shares saw high volatility this week, dropping nearly 9% on broader concerns regarding the easing of government restrictions on Chinese bidders in the power sector, before recovering slightly following the BCGCL announcement.
Industry analysts at UBS have maintained a 'Buy' rating on the stock with a target price of ₹375, citing BHEL's dominant position in the energy transition and its expanding footprint in the semi-high-speed rail segment (Vande Bharat).
Strategic Significance
By converting high-ash domestic coal into syngas and subsequently ammonium nitrate, the project aims to reduce India’s reliance on imported natural gas and chemicals. This not only aligns with the Atmanirbhar Bharat vision but also provides a sustainable pathway for utilizing India's vast coal reserves in an environmentally conscious manner.