Cabinet lets Coal India & arms extract CBM without seeking licence/ lease

New Delhi: In a major move to energize India's CBM potential the Cabinet Committee on Economic Affairs gave a green signal to Coal India Limited and its subsidiaries to extract Coal Bed Methane from its mines without seeking approvals under the Petroleum & Natural Gas Rules 1959 (PNG Rules, 1959) on Wednesday.

According to the coal ministry official statement, "The Cabinet Committee on Economic Affairs has approved amending clause 3 (xiii) of the notification dated 03.11.2015 issued by the Ministry of Petroleum & Natural gas under Section 12 of the Oil Fields (Regulation and Development) Act, 1948 (ORD Act, 1948)."

"Due to this amendment relaxation is granted under the Petroleum & Natural Gas Rules 1959 (PNG Rules, 1959), to Coal India Limited (CIL) and its subsidiaries for not applying for grant of license/lease under the PNG Rules, 1959 for extraction of Coal Bed Methane (CBM) under their Coal Bearing Areas," it further added. Seeing a larger impact, the government also expects that this will expedite the exploration and exploitation of CBM, enhance the availability of natural gas and reduce the gap in demand and supply of natural gas.

During the recent second part of the Budget Session, the coal minister Piyush Goyal mentioned, "The initial activities include assessment of CBM potentiality in subsidiaries of Coal India Limited to delineate CBM/CMM blocks in Damodar Valley Basin." The Cabinet Committee on Economic Affairs had approved a policy on exploration and exploitation of CBM areas under a coal mining leases allotted to CIL in December 2013.

CBM blocks initially were carved out by DGH in consultation with the coal ministry and Central Mine Planning and Design Institute (CMPDI).

33 blocks were awarded, which cover 64 percent of the total available coal-bearing areas in 12 states including Andhra Pradesh, Chhattisgarh, Gujarat, Jharkhand, Madhya Pradesh, Maharashtra, Assam, Odisha, Rajasthan, Tamil Nadu, Telangana and West Bengal. Now the state-run miner Coal India Ltd (CIL) has finally initiated a pilot study to extract CBM. The PSU has already engaged experienced developer/ service provider through a global tender.

One block has been delineated in Jharia coal-fields in Jharkhand and another in Raniganj coal-fields in West Bengal.

A year after the NDA government was formed, the oil minister Dharmendra Pradhan asserted that the CBM would contribute 5 percent of natural gas production by 2017, however, PPAC data showed that in 2016-2017 domestic production of CBM contributed to 1.78 percent of India's total natural gas production of over 31,000 MMSCM.

Meanwhile, in the last year, the Parliamentary Standing Committee on Petroleum and Natural Gas had also recommended a slew of measures to increase the pace of CBM extraction.

In another decision, the Cabinet also approved the delegation of powers to the Minister of Petroleum and Natural Gas and Minister of Finance to approve the award of the Blocks/Contract Areas to successful bidders under HELP/OALP after International Competitive Bidding (ICB).