KOLKATA (miningweekly.com) - The Central Mine Planning and Development Institute Limited (CMPDIL), the consultancy arm of miner Coal India Limited (CIL), has been appointed by the Indian government to act as the nodal agency for the development of underground coal gasification (UCG) projects in the country.

The mandate for CMPDIL included the auction of coal blocks for UCG projects, developing a bidding process, evaluating of bids, monitoring and evaluating of technology induction, production process parameters and contracts with successful bidders.

Immediately on receiving the mandate, CMPDIL has floated tenders seeking appointment of international consultants with a minimum of ten years of experience in framing contracts and developing projects of UCG, shale gas and/or coal bed methane (CBM).

In the policy guidelines laid down for CMPDIL by the government, the government stipulated that auction of coal blocks for UCG projects and model contracts would be similar to the one adopted in the case of CBM, and contracts with successful project developers would need to be based on a revenue sharing arrangement between the developer and asset owner.

This was a significant departure from the model contract envisaged two years ago, based on profit sharing arrangements, but this had failed to evoke any interest among prospective investors as UCG projects were inherently risky.

As part of the programme to kick-start UCG projects in the country, the government also established an inter-Ministerial committee to identify coal blocks suitable for such projects, an official in the Coal Ministry said.

He said that in the first step the government had short-listed two explored coal blocks that would be put up for auction over the next year and the list would be expanded subsequently for the longer term. The list would possibly include five unexplored lignite blocks.

However, at least two officials acknowledged India’s tardy experience in getting UCG projects off the ground and, particularly, sourcing of appropriate technology from global majors.

It might be mentioned that India’s first UCG project had been undertaken by IL in the 1980s but not even a pilot project could be successfully implemented. Attempts to source UCG technology from overseas, including from South Africa two years ago, had not met much success, the officials pointed out.

Under the circumstances, a section of the Coal Ministry favoured bringing China into consideration for the sourcing of UCG technology as it had ongoing UCG projects as well as technology.

However, there was an element of caution within government circles over India-China collaboration in a strategic area like energy in view of existing geopolitical relations between the two neighbouring countries, officials said.