The Cabinet on Thursday decided to give state-owned miner Coal India Ltd a licence to produce natural gas from coal seams (CBM) in its existing mines.

The Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Manmohan Singh, allowed Coal India (CIL), the world’s largest coal miner, to explore and produce coal-bed methane (CBM) in its existing mines, Coal Minister Sriprakash Jaiswal said.

“Yes, it is approved,” he told reporters in New Delhi.

Currently, rules and regulations prohibit mining firms from extracting CBM during mining as the policy does not allow for simultaneous extraction of methane (CBM) and coal.

CBM exploration and production is allowed only in pure coal-seam gas bearing blocks which are auctioned. Since 2001, 33 CBM blocks have been awarded in four auction rounds. Besides, two CBM blocks to Oil and Natural Gas Corp (ONGC) and one to Great Eastern Energy Co Ltd were awarded on a nomination basis.

According to the Directorate General of Hydrocarbons (DGH), India has CBM reserves of about 4.6 trillion cubic metres. Currently, three CBM blocks are producing around 0.15 million standard cubic metres per day (mscmd).

This is likely to touch 7.4 mscmd by 2013, according to the DGH.

Sources said CIL holds at least 20 per cent of the estimated 60 billion tonnes of coal resources in India.

It has several coal mines in eight states, which are estimated to have CBM reserves of 3.5-4 trillion cubic feet.

Many of its acreage are gaseous and unsafe mines, where mining of coal is possible only after the extraction of CBM.

Extracting methane (gas) ahead of coal mining from seams will allow CIL help unlock very significant quantities of coal reserves in areas of Jharkhand, West Bengal.

Sources said Coal India will be allowed to explore for CBM in the mines that were given to it on nomination basis.

It can take a state-owned explorer like Oil and Natural Gas Corp (ONGC) as a partner for the venture.

Oil Minister M Veerappa Moily had originally proposed allowing Coal India to rope in even private firms for CBM exploration and production.

However, the proposal was killed after strong objections from Coal Minister Sriprakash Jaiswal.

CBM extracted by CIL will be priced and marketed as per the Oil Ministry’s gas pricing and utilisation policy.

Sources said CIL had short-listed five blocks in Jharkhand with estimated CBM reserves of about 1 Tcf for exploration in the first stage.

These five assets are considered to be gaseous and unsafe mines at present.

CCEA refers proposal to double FCI buffer stock norm to CoS

The Cabinet Committee on Economic Affairs (CCEA) today referred to the committee of secretaries a proposal to double state-run Food Corporation of India’s buffer stock limit to 53 million tonnes of foodgrains a year.

“The CCEA has referred the proposal to revise the buffer stock norm of foodgrains in the central pool to a committee,” Food Minister K V Thomas said.

The committee of secretaries (CoS) will critically examine the Food Ministry’s proposal to allow FCI to maintain up to 53 million tonnes of foodgrain stocks in a year to implement the food security law.

The revision has been proposed keeping in mind the likely increase in the sale of foodgrains under the public distribution system with the implementation of the National Food Security Act.

The law entitles 67 per cent of the country’s population to subsidised foodgrains.

According to existing norms, the FCI can maintain a maximum foodgrain stock of 26 million tonnes. The limit has not been revised since April 2005. Thomas also said the CCEA deferred a decision on a separate ministry proposal to allocate extra foodgrains to states to meet demand during festivals and natural calamities.

The CCEA approved the Agriculture Ministry’s proposal on implementation of the national programme for bovine breeding and dairy development during the 12th Five-Year Plan period, he added.