Great Eastern Energy Corporation, the first firm to produce coal bed methane (CBM) in the country, plans to invest about Rs 2,000 crore as it seeks to step up production to more than 3 million cubic meters a day from its West Bengal site in about three years, one of its promoters and chief operating officer Prashant Modi told FE.
Bulk of this investment, to be raised from internal accruals and the sale of CBM, would be used for drilling more wells and laying transportation pipelines, Modi said.
GEECL had faced criticism from a rival bidder in the fourth round of CBM auction held last October that it took too long to start commercial production from the block licensed to it by Coal India Ltd more than 15 years ago, a claim GEEC denies. The average annual output has been 0.11 billion cubic meters for the last three years. The company?s idea is to increase the number of wells from 62 now to 300 in the next two years, which would enable the planned jump in gas production from the Raniganj coal field, Modi said.
The company had spent over Rs 600 crore in developing the CBM block and in laying pipelines, which now deliver gas up to 30 km from the site, the COO said. Besides industrial customers, GEEC sells gas for automobiles through Indian Oil Corporation?s retail outlets, he said. The AIM-listed company?s deal with the government is to produce and sell CBM from the Raniganj field till 2036 by sharing 12.5% of revenue to the government.
To promote clean fuel, the government has progressively made the terms of such agreements more attractive and does not ask for any signature bonus now. CBM producers can import equipment duty free but are not exempt from corporate tax. About 13,600 sq km of CBM blocks have so far been licensed out to companies including ONGC, RIL, GEEC and consortiums of GAIL, Arrow Energy, Tata Power, Coal Gas Mart and Deep Industries.