Cabinet nod for coal mines to PSUs, underground coal gasification

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved the allotment of coal mines to public sector undertakings (PSUs) for sale of coal especially to medium, small and cottage industries.

"This shall also enhance domestic production of coal to meet the demand of national economy, thereby reducing import," a coal ministry statement said after a cabinet meeting.

"The coal-bearing states shall be getting additional revenue from such coal mines equal to the amount of royalty on coal produced on a monthly basis during the lease period/life of the mine as well as one-time upfront payment, which is 10 percent of the intrinsic value of coal in the mine, in three instalments in the first year of allotment," the statement added.

In a separate decision on Wednesday, the union cabinet approved the drawing up of policy framework for development of underground coal gasification (UCG) in coal and lignite bearing areas.

UCG is a method of energy extraction from coal or lignite resources which are otherwise regarded as uneconomical to work through conventional mining methods.

"A policy on lines broadly similar to the existing policy for coal bed methane development on revenue sharing basis will be adopted for offering the blocks through competitive bidding," the coal ministry said.

An inter-ministerial committee under the coal ministry will identify areas, deciding about blocks to be put to bidding or awarding them to PSUs on nomination basis, the statement said.

The Central Mine Planning and Design Institute Limited will be the nodal agency for development of bid documents, work programme, conducting bidding process, evaluation of bids, monitoring and process protocols, among other related activities, it added.

The ministry said in two years some explored blocks will be identified for offer. Additional blocks will be identified for offer in the longer term.