India May Invite Foreign Firms to Produce Gas from Coal Mines Deemed Uneconomical

Indian government is likely to invite foreign firms to produce gas from coal blocks that have been relinquished by developers for being uneconomical, Economic Times newspaper reported Friday.

Officials said the blocks would be offered under a new policy for underground coal gasification.

According to the newspaper the government sees vast potential for underground coal gasification projects since only 41% of India's 301 billion tonnes of coal reserves are recoverable while the balance falls in uneconomical or inferred category.

The government plans to offer coal and linkage acreages in cases where conventional mining is not feasible, in isolated coal and lignite blocks and relinquished coal-bed methane or CBM blocks, Economic Times said.

India’s Power and coal minister had last month told Parliament that two coal blocks - Yellendu Dip Side in Telangana and Bandha-Singrauli Main Basin in Madhya Pradesh - and five lignite blocks had been identified for development of underground coal gasification, Economic Times added.

As per the present proposal, there will be a two-part bidding on the lines of revenue sharing model of CBM blocks auction. The bidders that qualify in the first technical round and offer to share the highest revenue with the government will win 30-year contracts to develop the mines, an official told Economic Times.