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FGD Vendors Seek Clarity as Government Dilutes Mandate for Coal Plants

Suppliers of flue gas desulphurisation (FGD) technology, including GE, Thermax, Larsen & Toubro, and Shapoorji Pallonji, are seeking clarity from the government after the Ministry of Environment, Forest, and Climate Change (MOEFCC) diluted the decade-old mandate requiring coal-fired power plants to install FGDs. The decision, citing new studies that Indian coal emits relatively low sulphur levels, has effectively paused or stalled a sector valued at nearly Rs30,000 crore, leaving ongoing projects in limbo.

Out of 537 identified thermal units with 204 GW of capacity, only 22.59 GW (11%) have installed FGDs. Contracts for another 102 GW are under implementation, while 79 GW remain in pre-tendering stages. Vendors have requested the government to make the exemption applicable only to future projects, allowing ongoing ones to proceed under existing contracts. Many are also seeking compensation if committed projects are scrapped, as utilities are holding back payments amidst the uncertainty.

The decision has already impacted major companies, with NTPC halting FGD work at five plants and Bharat Heavy Electricals Ltd (BHEL) affected on 7 GW of projects. Analysts note the move could derail a $30 billion industry, while vendors emphasize the need for clear policy directions to protect investments and avoid financial losses.