Coal Ministry’s keenness on allowing Coal India ltd (CIl) and its subsidiaries to mine Coal Bed Methane (CBM) reserves, has led to a logjam within the Government as the Petroleum Ministry wants other State-owned companies also to be allowed mining rights of these blocks. With two key ministries holding contrarian views on the matter, the NDA Government’s plan to accelerate production from these blocks seems to have hit a roadblock.
Finance Minister Arun Jaitley had said in his maiden Budget speech in July last year that the Government wants to accelerate production and exploitation of CBM reserves. This is significant, especially in the light of the fact that out of the total 33 CBM blocks in the country, only one is under active production.
The Coal Ministry on its part is preparing the Cabinet note in order to reiterate its long standing stance that only Coal India ltd (CIl) and its subsidiaries should be allowed to develop the CBM blocks, sources privy to the development said. Stung by the coal block allocation scam, a cautious Coal Ministry is wary of allowing other PSUs to mine CBM blocks, as it feels that these companies may have joint ventures with private entities and there could be legal complications, sources added
At the same time, the Petroleum Ministry wants entry of other PSUs also in exploration of CBM blocks, as it wants to fast-track mining of these reserves.
Sources aware of the development don’t rule out the possibility of the Petroleum Ministry objecting to the Coal Ministry’s note, once it is sent to concerned stakeholders for their comments on the matter.
During a meeting of the Cabinet Committee of Economic Affairs (CCEA) held in December 2013, the Coal Ministry had reportedly expressed its reservations over allowing other PSUs apart from CIl, to exploit the CBM reserves. However the CCEA later in the same meeting, allowed mining of CBM blocks by other State-owned companies also, according to information available with The Pioneer.
While this happened during the UPA regime, it is learnt that the Petroleum Ministry has now approached the Coal Ministry afresh, seeking to know whether it can go ahead and allow companies other than CIl and its subsidiaries to explore and exploit CBM reserves, as per the decision taken by the CCEA in December 2013.
The Coal Ministry, according to sources, is said to have conveyed its known stand on the matter to the Petroleum Ministry. Its logic behind the stand is that State-owned PSUs other than CIl, may have entered into joint ventures with private companies, and this could lead to legal complications.
The cautious stand by the Coal Ministry, according to sources, has its roots in the Supreme Court’s last year judgment on coal blocks, when it had cancelled 204 reserves. The ministry, they added, wants to re-examine issues related to CBM blocks in detail and therefore the note has been floated by it.
With both ministries at cross-purposes, the final decision will have to be taken by the CCEA once the note reaches its door for clearance.