India approves UCG

India approves coal gasification policy based on revenue sharing model

in Commodity News 19/12/2015


The Indian government on Thursday approved a national coal gasification policy under which coal and lignite blocks would be allocated through auction, with revenue sharing contracts signed with successful bidders.
Under a decision taken by the Union Cabinet of Ministers, an inter-ministerial committee under the Coal Ministry would be established and entrusted to identify suitable lignite and coal blocks for gasification projects and subsequently put up for auction, a government official said. The Coal Ministry would also appoint a consultant to draw up a model contract based on revenue sharing, along the lines of existing model contracts in the case of coal bed methane.
In the first phase of the policy, to play out over the next two years, existing explored coal and lignite blocks would be identified for auction, based on technical parameters laid down by the Central Mine Planning and Design Institute Limited (CMPDIL), the technical consultancy arm of Coal India Limited (CIL). However, it was still unclear as to how the new coal gasification policy would help kick-start projects since coal gasification has been floundering in India ever since the first project undertaken by CIL way back in 1980.
The first project of CIL in 1980 was launched with assistance of erstwhile USSR but abandoned mid-way as both partners failed to face up to technical challenges. According to an old report of CMPDIL, “ CIL’s and oil exploration and production major ONGC’s attempts to carry out pilot scale projects for development of underground coal gasification (UCG) was marred by a number of challenges”. “Despite successful trial burns and technological advancements full-fledged commercial scale UCG operations are not on the near horizon,” the report said. It might be mentioned that early last year, the Indian government sought cooperation from South Africa in UCG technologies and development of projects in India through joint ventures of companies in both the countries, but not much headway had been achieved, the official added.
Last year, eight Indian and foreign companies responded to expression of interest issued by CIL to partner in coal gasification projects. These included Australian Linc Energy, Lemar LLC from the US, Malaysia’s Essem Group, as well as India’s Reliance Power, Jindal Steel and Power Limited, GAIL India and Maheswari Group. However, no information was available about these proposals making any headway, a CIL official said.
Source: Mining Weekly