Moily rejects move to give Coal India CBM exploration rights

India's petroleum and natural gas minister Veerappa Moily has reportedly rejected a draft note for the union cabinet proposing giving rights for exploration of coal-bed methane (CBM) to state-run Coal India Ltd without auction.

Moily said CIL - the single largest coal producer in the world which supplies over 80 per cent of India's consumption – should not get automatic rights over CBM exploration just because most of the country's coal mining blocks are held by it.

He directed the officials concerned to re-draft it to encourage competition and efficiency.

An Economic Times report quoted an unnamed official as saying, "Coal India is not an expert in CBM exploration, as ONGC (Oil & Natural Gas Corp) is not an expert in coal mining. The government can't allow ONGC to mine coal just because coal is found in its oil and gas blocks."

Moily has put in a new team of officials to re-draft the note, which is expected to be ready by November, according to the report.

According to laws governing mining in India, coal mining is the mandate of the coal ministry while the oil ministry regulates exploration of CBM.

The government approved a shale gas policy last month that allowed only state-run firms ONGC and Oil India Ltd (OIL) to explore shale resources in oil and gas blocks held by them.

The policy was approved in spite of Moily's initial resistance to the exclusion of private explorers.