KOLKATA (miningweekly.com) – India would only start auctioning coal blocks for underground gasification projects once the government has framed a national policy on coal gasification.

According to a senior Coal Ministry official, there was a lot of work to be done to give underground coal gasification (UCG) projects a boost, particularly considering that opencast mining was becoming increasingly difficult owing to land-related issues.

Furthermore, a definite policy framework was needed for the sector since India was not only lagging behind in underground gasification projects, but the country was also technologically deficient in this segment, the official said.

The policy was expected to lay down parameters on the eligibility of bidders, technology sourcing and incentives required, minimum investments, production sharing and pricing.

On the current status of the policy, the official said that a working note had already been placed before the Cabinet of Ministers and inputs had been sought from various other Ministries.

However, the Coal Ministry official declined to comment on the fate of two coal blocks already identified for gasification projects and earmarked for auction.

The Central Mine Planning and Design Institute Limited, a subsidiary of Coal India Limited, had already decided to offer two coal blocks for underground gasification projects through competitive bids and 14 companies had voiced interest in participating in the projects.

Apart from these blocks, the Coal Ministry has also identified five lignite blocks with estimated reserves of 950-million tons that are suitable for gasification, but the allocation of these to private investors through auction would have to wait until the policy was framed and adopted by the government, the official added.

Early this, year, the Coal Ministry made overtures to the South African government seeking cooperation on coal gasification technology, and the Indian government was waiting for a response to push ahead, the official said.

It was pointed out that even if 5% of unmineable coal reserves could be brought under coal gasification projects, the energy-starved country could secure about three-trillion cubic meters of gas equivalent. But significantly, even though the maiden gasification project had been undertaken nearly five years ago, not one project had gone on stream compared with the over 40 UCG projects operational in China.