Coal block operators may get automatic CBM rights
5 Sept 2014 4:46 AM IST
Thus, the proposed policy change will benefit both other public sector undertakings (PSUs) as well as private sector firms. However, any company that simultaneously mines both coal and CBM under this policy will have to strictly maintain the original production schedule of coal, a rider that the Govt is keeping to ensure that a firm’s CBM-related activities do not in any way jeopardise output of the vital fossil fuel and further aggravate an already precarious coal shortage in the Indian economy.
The Government, according to sources, also plans another big sop to boost CBM exploration and mining. It will ensure that there is no ceiling on the price of CBM gas — unlike the case of conventional natural gas — and miners will be able to sell CBM at market prices. However, the minimum price at which royalty and production level payments (PLPs) are to be made will be at the level at which the price of conventional gas is fixed.
As for the contractual problems and issues of granting concessions in existing CBM-only blocks that will arise once this new joint coal-CBM mining framework is introduced, the Government plans to form an Empowered Committee under the petroleum and natural gas minister to resolve them. However, in case of any overlap of a coal mining area with that of CBM, the new rules will categorically give the advantage to the coal mining license holder and not the CBM operator. In cases where CBM blocks have already been allocated, the coal ministry will have to stay away from allocating an overlapping coal block wherever possible.
In a situation where a partial overlap is unavoidable, there will be a provision for the problem to be solved through meetings between the Coal Ministry and the Ministry of Petroleum And Natural Gas (MoPNG) — as cold bed methane falls under the jurisdiction of the MoPNG under the current regime of natural resource mining rules.
However, in a situation where co-development would not be possible due to safety reasons, the CBM licence will be terminated and its assets would be given to the coal mining licencee. The money already spent by the CBM operator, which is usually huge, would be compensated in accordance with valuations carried out by an independent third party.
In such special cases, to enter CBM production the coal mine licence holder will have to make monthly royalty payments at the rate of 10 per cent as well as production level payments (PLPs).
The Government, according to sources, also plans another big sop to boost CBM exploration and mining. It will ensure that there is no ceiling on the price of CBM gas — unlike the case of conventional natural gas — and miners will be able to sell CBM at market prices. However, the minimum price at which royalty and production level payments (PLPs) are to be made will be at the level at which the price of conventional gas is fixed.
As for the contractual problems and issues of granting concessions in existing CBM-only blocks that will arise once this new joint coal-CBM mining framework is introduced, the Government plans to form an Empowered Committee under the petroleum and natural gas minister to resolve them. However, in case of any overlap of a coal mining area with that of CBM, the new rules will categorically give the advantage to the coal mining license holder and not the CBM operator. In cases where CBM blocks have already been allocated, the coal ministry will have to stay away from allocating an overlapping coal block wherever possible.
In a situation where a partial overlap is unavoidable, there will be a provision for the problem to be solved through meetings between the Coal Ministry and the Ministry of Petroleum And Natural Gas (MoPNG) — as cold bed methane falls under the jurisdiction of the MoPNG under the current regime of natural resource mining rules.
However, in a situation where co-development would not be possible due to safety reasons, the CBM licence will be terminated and its assets would be given to the coal mining licencee. The money already spent by the CBM operator, which is usually huge, would be compensated in accordance with valuations carried out by an independent third party.
In such special cases, to enter CBM production the coal mine licence holder will have to make monthly royalty payments at the rate of 10 per cent as well as production level payments (PLPs).
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