KOLKATA (miningweekly.com) - India’s Coal Ministry has identified five lignite and two coal blocks, with estimated reserves of 950-million tons, that would be offered to private investors to undertake underground coal gasification projects.

According to Junior Coal Minister Pratik Prakashbapu Patil, provisions in the Mines and Minerals (Development & Regulation) Act were currently in the process of being amended to enable these blocks to be offered to private investors.

He said that the government had already issued notifications about the conditions under which private companies would be permitted to undertake underground coal gasification projects, and that these were within the ambit of the captive coal mining policy.

Under Indian coal mining legislation, coal mining was the exclusive domain of the government or government-owned mining companies, while private investors were permitted to mine for coal solely for captive consumption and not merchant business.

Patil said that the Coal Ministry had already allotted two coal blocks at Talcher, in the east Indian provice of Orissa, to Strategic Energy Technology Systems, and another block, at Ramchandi, to Jindal Steel & Power. Both blocks had a production capacity of about 80 000 bbl/d of oil and were scheduled for completion in 2018.

Mining Weekly Online had previously reported that the Indian government was seeking cooperation from the South African government to collaborate on underground coal gasification technologies and sought to develop projects in India through joint ventures with private investors.

India’s implementation of underground coal gasification projects had been dismal, despite 350-billion-tons of potential coal reserves, and had resulted in rising shortages and import dependency. The country’s first underground coal gasification project, undertaken six years ago, was yet to make any headway.

The Coal Ministry estimates that even if 5% of India’s unmineable coal reserves were to be successfully exploited for gasification, it could yield three-trillion cubic metres of gas equivalent.

The allocation of five lignite and two coal blocks for gasification projects was subject to the announcement of a comprehensive policy pertaining to coal gasification, which was expected shortly, a Coal Ministry official said.

POLICY ON BLOCK ALLOCATION HELD UP

However, government officials conceded that ongoing investigations by the Central Bureau of Investigations (CBI) into the allocation of coal blocks during the period 2006 to 2009, could cast uncertainty over new allocations for coal gasification.

The CBI was investigating allegations of corruption, misgovernance and lack of transparency in the allocation process. During the period under review, 151 companies were allocated 68 coal blocks from 2 100 applications.

According to media reports, the CBI for the first time pointed out irregularities in coal-block allocation while presenting its case before the Supreme Court.

The court observed that it “would examine whether the selection was rational or pick-and-choose” and issued a warning that the entire allocation would have to “go” if procedures had not been followed. The Supreme Court had fixed April 26 for the next hearing.

The court warning of scrapping past allocations would definitely impact new coal-block allocations, Ministry officials said.

The national auditors, the Comptroller & Auditor General (CAG) had, in a report, put the loss to the National Exchequer as a result of the discretionary allocation of coal blocks rather than auctioning coal blocks, at $34-billion.