KOLKATA (miningweekly.com) – Indian major Coal India Limited (CIL) was unlikely to secure rights to coalbed methane (CBM) extraction on any of its tenement areas.

According to a decision taken by the Petroleum and Natural Gas Ministry, if CIL were to embark on CBM development, the company would have to participate in the auction of blocks that would be used exclusively for the extraction of the gas.

CIL would compete with other prospective bidders and would not be allowed to claim rights to embark on CBM extraction in coal blocks currently controlled by CIL.

The decision has been justified on the grounds that CIL did not have expertise in CBM development, just as ONGC Limited, the oil and gas exploration and production major proposing to enter CBM, was not an expert in coal mining, the official in the Ministry said.

Under Indian mining laws, while coal mining was under the administration of the Coal Ministry, oil and gas exploration and production was governed by the Petroleum and Natural Gas Ministry.

The policy tussle between the Coal and Petroleum Ministries over CBM reflected the that the government was wary wary of allocating the blocks to government- and privately owned companies, as it risked opening up a host of policy and administrative controversies, the official said.

In the wake of the current political furore over allegations that the allocation of coal blocks had been corrupted and discretionary powers misused, the government feared raking up fresh issues if coal blocks were not allocated through competitive bidding for both private and government companies.

To date, 33 CBM blocks have been allocated to ONGC, Reliance Industries and Essar, through four auctions. However, allottees and the Petroleum and Natural Gas Ministry were in dispute over pricing, which saw the Ministry maintaining that while CBM producers were free to sell the gas, they would have to identify customers and decide on the allocation of quantities of gas in line with government-sanctioned industry-sector prioritisation.