The Government of India (GoI) has offered 10 blocks in different
coalfields around the country for the exploration and production of
Coal Bed Methane (CBM). The blocks, amounting to an area of 5,000
sq. kms, are located in the states of Assam, Jharkhand, Orrissa,
Madhya Pradesh, Chhattisgarh, Maharashtra and Tamil Nadu. The GoI
is inviting foreign and Indian companies to bid for the blocks on a
level playing field through a competitive bidding system.
CBM in India
India, with the fourth largest proven coal reserves in the
world, holds considerable prospects for exploration and
exploitation of CBM. The total sedimentary area for CBM exploration
is around 26,000 sq. kms. A total of 26 blocks covering an area of
13,600 sq. kms have been awarded under three previous bidding
rounds, and three of these blocks have entered the development
phase. Exploration has therefore yet to be initiated in nearly 50%
of the total sedimentary area, presenting a significant opportunity
for potential investors.
Key features of the bidding round
Companies may bid for one or more blocks, singly or in
association with other companies through an unincorporated or
incorporated venture. Successful bidders will be required to enter
into a contract with the Government, which will be based on a Model
The GoI recently undertook a consultation process with various
stakeholders, such as E&P companies and industry bodies, and
their views have been factored into the preparation of the bid
documents. Some features of the terms offered by the GoI are:
No signature bonus.
Up to 100% participation by foreign companies.
Royalty payable to the relevant State Government at the rate of
Biddable Production Level Payment payable to the Central
Corporate income tax payable as per the Income Tax Act
Freedom to market gas in domestic market at market determined
Fiscal stability provision in the contract.
No customs duty on imports required for CBM operations.
Provisions for assignment of participating interest.
The following main criteria will be considered when evaluating
bids submitted by a company/consortium:
(i) Technical capability
(ii) Financial strength
(iii) Work programme commitment
(iv) Fiscal package
Further details of the blocks on offer and the bidding process
can be found by clicking here.
The closing date for bids is 10 August 2009.
This article was written for Law-Now, CMS Cameron
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