After Essar Power decision about Tokisud North, now Steel major Steel Authority of India limited (SAIl) has decided to relinquish Parbatpur coal block it had taken over on March 30, 2016.

Highly placed sources in SAIl confided to The Pioneer that the decision to surrender the block had been taken in principle which would be finally approved by the PSU’s apex board.

“The final call is expected by the next month when the Board would stamp the step taken after considering all the issues involved in making the coal block operational. The SAIl has reached to the decision following the assessment of feasibility reports which have established that it is not viable for the company to continue with it,” said an official of the nation’s steel producer.

It is learnt that SAIl had roped in consultancy firm Mecon to prepare a feasibility report about the scheduled-II category block that comprises those were operational prior to getting cancelled by the Supreme Court order given in the light of the ‘coal scam’. “The call to do away with Parbatpur has been taken based on Mecon status report,” added the official. 

Parbatpur is located near Jharia and was firstly allocated by the Petroleum Ministry to ONGC in January 2002 for coal bed methane (CBM). In July 2005, the Coal Ministry allotted the same block to Electrosteel Castings ltd (ECl) for coal mining purposes. later on, the coal mining segment fell into SAIl’s kitty following the Supreme Court cancelling coal blocks en mass including Parbatpur block and the Government going for auction route.

 The ONGC has reached to an advanced stage of erecting country’s biggest CBM project in Bokaro after having invested Rs 823 crore to produce the natural gas trapped in coal seams. Recently Union Minister Dharmendra Pradhan had inaugurated the first development well as the gas major has planned to drill 30 development wells. If inputs coming from SAIl are to be believed, priority being given to extraction of CBM is the main bone of contention.

“ONGC has a greater and extended role to play in the coal mining area. SAIl is of the views that either coal or CBM can be extracted at a time. Mining of the both cannot go hand in hand. That is the primary reason why the SAIl has decided to withdraw,” quipped he.

The coal block has been among the four schedule-II blocks falling in Jharkhand but unable to record substantial progress since getting reallocated. Parbatpur besides Tokisud North and South and Pachuwara-Central also figured during discussion in a recent review conducted by the Coal Ministry and State Government officials.

Confirming to the development, Jharkhand Mines Commissioner Aboobacker Siddique said that the SAIl had intimated the State Government about this. “We have come to know just recently that SAIl is going to surrender Parbatpur due to some issues involved.

Though, no formal communication has been made to us from the Coal Ministry so far,” he said.

CBM, experts say, is trapped in coal reserves due to the pressure of overlying rock formations and needs dewatering the coal beds to facilitate extraction. Initially, the CBM wells produce only water that subsequently replaces the gas production.

 ONGC has been working in Jharia coalfield since 1992 for CBM exploration.

The first breakthrough came in 1997 when ONGC was successful in flowing CBM from one of the R & D wells. Estimated CBM reserves in the area is 8 BCM (0.28 trillion cu. ff.). Though, as per agreement, total CBM produced by ONGC would be sold to SAIl’ Bokaro plant.