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Our Bureau

Kolkata , Dec. 22

GREAT Eastern Energy Corporation Ltd, a Y.K. Modi Group company, will invest Rs 575 crore in a coal bed methane (CBM) project in West Bengal.

The company announced plans on Thursday to commission drilling of the first lot of 20 wells out of the 100 CBM wells planned in Raniganj coalfields.

The project is stated to be the first-of-its-kind energy generation project in India that would harness the potential of CBM.

Addressing a news conference here, Mr Y.K. Modi, Chairman and Managing Director of Great Eastern Energy Corporation Ltd, said the company had obtained a 30-year licence for extraction of CBM over an area of 210 sq km in Raniganj coalfields.

The total estimated CBM reserves in the 100 wells had been pegged at 1.3 trillion cubic feet. To fund the first phase of the project, the company would source funds from its equity and reserves, which presently stand at around Rs 150 crore. The rest would be generated from internal accruals and, if needed, by way of debt to the tune of Rs 150-200 crore.

The company recently raised $20 million (about Rs 100 crore) by placing GDRs, which have been listed at the Alternative Investment Market of London Stock Exchange.

Mr Modi said that while the company planned to build 100 wells over the next few years, the process could be expedited if the company desired.

At peak production from 100 wells, the company would produce 35 million cubic feet of CBM per day.

The company would pay 12.5 per cent of the well-head gas price to the government as royalty.

According to him, the demand for gas in India was estimated to be around 300 million standard cubic metres per day by 2011-12. In the US, 10 per cent of the natural gas requirement is met by CBM.

Mr Modi said that Great Eastern Energy has signed memoranda of understanding with companies such as SAIL and Dishergarh Power Supply Corporation for marketing. Talks were also on with steel, power, engineering and sponge iron companies for marketing of the CBM that would be extracted.

"All companies that burn liquid fuel or coal are our potential customers and we shall tap as many of them as we can," he said. Test marketing of CBM would commence in the next three months.

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