KOLKATA (miningweekly.com) – The Indian government will align its mining and gas exploration legislation to facilitate the exploration and mining of coal and coalbed methane (CBM) by domestic and foreign investors.

A senior official in the Coal Ministry said that various legislation relating to the coal and gas sectors would be tweaked by bringing in necessary amendments during the forthcoming winter session of the Indian Parliament scheduled to commence on November 24, and to continue for a month.

Elaborating on the conflicted legal environment, he said that as per the Coal Nationalisation Act 1972, coal mining was the exclusive domain of government-owned companies while under the New Exploration and Licensing Policy pertaining to the oil and gas sector, government companies as well as private investors would be permitted to explore and extract oil and gas from blocks allocated to them through a competitive auction process.

In such a legislative environment, a private investor could only exploit CBM from blocks allocated to them. Simultaneously, private investors allocated coal blocks for captive consumption in the steel, power and cement sectors were permitted to mine only coal and not gas. Even in captive coal mining, production was not permitted to be diverted to any end use other than for the specific project for which it was allocated, the official said.

Even the regulatory authorities for the sectors were separate with coal mining under the administrative control of the Coal Ministry and natural gas, including CBM, under the purview of the Petroleum and Natural Gas Ministry.

With two distinct authorities governing coal and CBM, there was no clarity within government as to who would be the regulatory body for governing the production sharing contracts between the government allocating the block and the private investors responsible for resource extraction, the official said.

One of the legislative changes being drafted was a relaxation of end-use norms in the case of captive mines. Successful bidders at the forthcoming auction of 74 coal blocks scheduled for December and January would be free to mine coal as well as exploit any recoverable CBM with no restriction on end use.

Since 2001, the Indian government had allocated 33 CBM blocks through four rounds of global bidding but companies were restricted only to extract gas and not coal from the allocated blocks. The government felt now that enabling simultaneous extraction of coal and CBM would be more attractive for global investors, he said.

According to a report of Central Mine Planning and Design Institute Limited (CMPDIL), a consultancy wing of Coal India Limited, the recovery potential of CBM in India was estimated at between 710-billion and 943-billion cubic meters.