KOLKATA (miningweekly.com) – Tweaking the rules of the current administrative regime, India’s Coal Ministry has permitted Coal India Limited (CIL) and its wholly-owned subsidiaries to extract coal bed methane (CBM) under existing coal block mining leases.

The liberalisation of the rules would permit CIL to fast-track its plans for CBM extraction without having to participate in an auction to secure new coal blocks for such projects, a Ministry official says.

In fact, in anticipation of the changes in the rules, CIL has already identified its Raniganj and Jharia coal blocks in eastern India to start CBM extraction. According to a CIL official, geological studies will be initiated soon and, subject to securing mandatory approvals, the miner is confident of starting commercial production by 2021.

In another move to incentivise CBM production, India’s Cabinet last week approved a proposal that CBM producers be extended the freedom to price the market.

The pricing and marketing freedom, in the case of CBM, is in line with the new exploration and licensing policy applicable for other oil- and gasfields being put up for auction under the Hydrocarbon Exploration and Licensing Policy.

The liberalised rules will immediately impact Reliance Industries, which is on the verge of starting production from its two coal blocks in the central Indian province of Madhya Pradesh, and the government expects other operators that have secured coal blocks to step up efforts to operationalise the assets, the Ministry official says.

The pricing freedom will adequately address the complaints of operators that CBM projects are being delayed as operators do not find the government fixed price of $2.50 per British thermal unit, economically viable, he adds.

In four rounds of auction held over the past few years, the government had awarded 33 coal blocks for CBM production, across 12 provinces with estimated reserves of 62.4-trillion cubic feet but only four projects had gone on stream to date.