Date:10/02/2007 URL: http://www.thehindubusinessline.com/2007/02/10/stories/2007021006971000.htm

Coal blocks allotment for gasification to be notified

Ambarish Mukherjee

Ministry working on declaring underground gasification as permissible end use

New venture
ONGC-CIL joint venture and Reliance and Essar have expressed interest in the project
Coal Mining and Planning Development Institute Ltd will identify the blocks after notification

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New Delhi Feb. 9 The Government will shortly notify allotment of coal blocks for underground gasification to boost the availability of gas in the country, now that NELP-VI bids have been announced, official sources said.

Present rules do not permit underground gasification as a permissible end use for allotment of coal blocks. Notification to change the rule is currently being processed by the Ministry of Coal and is likely to be notified by the end of the current financial year. This would amend the Coal Mines (Nationalisation) Act of 1973, the sources said.

Currently, three companies have expressed eagerness to undertake coal gasification, namely a joint venture between ONGC and Coal India in the public sector and Reliance and Essar in the private sector. "The Prime Minister's Office (PMO) too has indicated that an early start is desirable to explore this new frontier of energy and the Ministry is working to bring out a notification declaring underground gasification as an eligible end use for allotment of coal blocks," the sources said.

The move followed the meeting of the Indo-US Energy Working Group held in November 2006 where the relevant issues were short-listed.

The technical considerations include consistency of the quality of gas produced, gas supply logistics and the quality of coal that is to be made available for gasification.

"The Ministry is of the view that since this type of projects are highly capital intensive, let it be left to the promoter companies to sort out all necessary issues involving capital and technology," the sources said.

According to the plans, after the notification is in place, Coal Mining and Planning Development Institute Ltd, which has all the requisite data regarding availability of coal in the country, will identify the blocks that can be allotted for gasification after which the parties would be called for necessary action.

Interestingly, though the current rules do not permit underground gasification, the proposal received from ONGC-CIL joint venture, which has suggested a Rs 100-crore pilot project, has been cleared under the `Government Company Dispensation Rule'.

ONGC is sourcing technical expertise from Russia's Skochinsky Institute of Mining.

Reliance in a letter to the Coal Ministry has stated that the company is prepared to invest large amount of risk capital for undertaking a pilot project while Essar has said that it wants to make use of this gas for its proposed steel plant in Orissa by using non-coking coal supplies from Talcher and using technology from Lurgi AG, the sources said.