Cabinet has approved a policy framework for development of underground coal gasification (UCG) in coal and lignite bearing areas in India. UCG is a method of extraction of energy from coal/lignite resources which are otherwise regarded as uneconomical to work through conventional mining methods. A policy on the lines broadly similar to the existing policy for coal bed methane (CBM) development on revenue sharing basis will be adopted for offering the blocks through competitive bidding.

Development of UCG is envisaged to provide for energy security. An Inter-Ministerial Committee under the Ministry of Coal with members from concerned ministries will be responsible for identification of the areas, deciding about blocks to be put to bidding or awarding them to PSUs on nomination basis.

The Ministry of Coal may also engage a consultant for development of the contract document. For development of bid documents, work programme, conducting the bidding process, evaluation of bids, monitoring and process protocols, etc, Central Mine Planning and Design Institute Limited (CMPDIL) will be the nodal agency. In the perspective of next two years some explored blocks will be identified for offer. Subsequently, additional blocks will be identified for offer in the long term.