Coal India Ltd (CIL) is set to enter synthetic coal gas production with plans to start development of two such projects soon with the help of private sector.
The two identified projects are at Kaitha in Jharkhand's Ramgarh coalfield and at Thesgora mine in Pench-Kanhan coalfield in Madhya Pradesh, for which applications from private developers have been sought.
In these two blocks isolated coal deposits are occurring at greater depth.
"Mining of coal seams in these areas is not economical at present and for getting energy from these areas, the process of underground coal gasification is being contemplated," the bid document said.
With this initiative, the public sector near-monopoly coal miner would follow the footsteps of Reliance Industries, the country's largest private sector energy player whose ongoing refinery expansion project at Jamnagar plans to produce among other things synthetic gas from petroleum coke for further use as fuels and for hydrogen and chemicals production.
While Reliance is expected to produce the entire syngas for captive use, CIL plans to create a market for it.
So apart from commercial development of underground coal gasification, discovery of domestic syngas prices and also setting up joint ventures with private sector for development of distribution network are also on CIL's agenda.
"Market price of syngas shall be as approved by management committee and discovered through competitive bidding mechanism inviting price bids from identified consumers located within target market of contract area," the bid document said.
The private developer would be selected on the basis of best revenue sharing offer.
"The revenue available for sharing with the developer will either be the net sale proceeds of syngas or the market price of syngas in case of captive use by the developer or a combination thereof."
The contract with selected developer would be for a period of 25 years, of which pilot stage would be allowed for a period of three consecutive contract years.
In a bid to develop the market, CIL is open to setting up an equal joint venture that would create required marketing infrastructure.
"The company shall have a right to participate in development of the marketing infrastructure for transportation of syngas beyond the field delivery point. Company's participation shall be in the form of investment up to 50% of equity in the joint venture to be formed between the company and the developer," the bid document said.