Page 68 - Policy Economic Report- June'26

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

During the workshop, presentations were delivered by BHEL on coal gasification technology; Jindal Steel
Limited (JSL) and Greta Energy on their coal gasification projects and the relevance of the technology for
BRICS countries. Eastern Coalfields Limited (ECL) presented the progress of the Kasta Underground Coal
Gasification (UCG) Pilot Project, while the Nominated Authority highlighted coal block allocation and
policy initiatives for UCG. Coal India Limited (CIL) showcased coal linkage provisions and the coal
gasification projects being undertaken by the company.

An interactive panel discussion was held on various aspects of coal gasification, including technology,
project economics, geological and processing challenges, utilisation of high-ash Indian coal, and the policy
and financial support required for wider adoption of the technology.

The event provided a platform for exchange of knowledge and experiences among BRICS countries and
other stakeholders, while highlighting the role of coal gasification in supporting energy security, industrial
development and cleaner utilisation of coal.

21. Cabinet approves Price Stabilization Fund for Scheduled Indian Airlines towards ATF pricing

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved one-time budgetary
support not exceeding Rs.10,000 crore for Oil Marketing Companies (OMCs) to provide ATF price
stabilization support to Scheduled Indian Airlines for their domestic and international operations. The
budgetary support shall be in the form of interest-free advances to OMCs through the Demands for Grants
of the Ministry of Petroleum and Natural Gas. The support shall be provided to OMCs to facilitate stable
ATF pricing for airlines during the ongoing period of exceptional fuel price volatility arising from the West
Asia crisis.

Key component of the approved of Price Stabilization Fund:

(i) Interest-Free advance to OMCs

A one-time budgetary support of up to Rs.10,000 crore shall be provided as an interest-free advance to
OMCs to support ATF price stabilization for Scheduled Indian Airlines. The corpus shall compensate OMCs
for losses arising from elevated international ATF prices whenever the prevailing Import Parity Price
exceeds the benchmark price determined under the approved mechanism.

(ii) Recovery and True-Up Mechanism

When international ATF prices moderate, the differential amount shall be recovered from OMCs and
returned to the Consolidated Fund of India. The arrangement shall continue until the entire support
amount is fully recovered and settled.

(iii) Coverage of Domestic and International Operations

The scheme shall be available to all willing Scheduled Indian carriers for both domestic and international
operations.

(iv) Fixed ATF Price Arrangement

The mechanism provides greater predictability in fuel costs by adopting a fixed-price arrangement for
domestic and international operations, thereby reducing airline’s exposure to sudden fuel price spikes.

(v) Exclusive rights of ATF supply to OMCs

The arrangement will be implemented through an MoU between participating Indian airlines and OMCs,
with the Ministry of Civil Aviation and the Ministry of Petroleum & Natural Gas as signatories. Under this
one-time arrangement, participating airlines will procure ATF only from OMCs for up to three years,
subject to annual review or until the advance amount is fully recovered, whichever is earlier.

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