CIL, ONGC coal block survey in 18 months

Coal India Limited (CIL) expects the exploration of coal block for its proposed coal gasification project in joint venture with Oil and Natural Gas Corporation (ONGC) to be done within 18 months.

CIL has already identified one of the coal blocks situated in the mining area of Eastern Coalfields Limited (ECL), a subsidiary of CIL for this project.

CIL had entered into a MoU (memorandum of understanding) with ONGC in 2007 for taking up the coal gasification project. “Work has already been awarded by CIL to a private agency for carrying out a detailed exploration of the coal block for the coal gasification project. The process of exploration would take around 18 months to be completed and the relevant data collected would be submitted to a premier mining institute in Russia which will act as the consultant for the project”, a top official of CIL told Business Standard. The coal block identified by CIL for the gasification project is located in a mining area spread over 4 sq km.

The reserves of the coal block and the expenditure on the coal gasification project can be ascertained after the completion of the exploration work.

Meanwhile, CIL is also going ahead with the implementation of the demonstration scheme for Coal Bed Methane (CBM) and Coal Mine Methane (CMM) in two separate coal blocks of Bharat Coking Coal Limited (BCCL), another subsidiary of the coal PSU.

The demonstration scheme for CBM and CMM is being taken up at an investment of Rs 98 crore and it is jointly funded by United Nations Development Programme (UNDP), the Union coal ministry and CIL.

The power generated by the CBM and CMM projects would be used by CIL for captive purposes.

Asked about the signing of the Fuel Supply Agreement (FSA) between CIL and National Thermal Power Corporation (NTPC), the CIL official said, “We need to be have another round of negotiations with NTPC and the Union power ministry for signing the FSA.”

CIL was expected to sign the FSA with NTPC very soon as most of the issues pertaining to supply of coal had been resolved.

CIL had even agreed to raise the trigger level of coal from 75 per cent to 90 per cent.

Trigger level is the minimum assured level of coal supply and offtake, failing which both the coal supplier and the consumer would attract penalty.

Power plants in the country had demanded that CIL should raise the trigger level to 90 per cent falling which they would not sign the FSA.

The demand was made by the power producers amidst inadequate coal supplies which had slipped many power plants in the country into the critical and super critical states with coal stocks of less than seven days and four days respectively. FSA as mentioned in the New Coal Distribution Policy of the Union coal ministry in 2007 is a long-term pact between coal producers and consumers aimed at ensuring a dedicated supply of fuel.