The government's new coal-bed methane policy will allow Coal India Ltd (CIL) to produce coal-bed methane (CBM) gas trapped in coal mines it owns, Oil Secretary Vivek Rae revealed.

Government-owned miner CIL owns vast tracts of coal blocks with potential reservoirs of CBM gas below coal seams. Under the new policy, the state-owned miner will not have to place bids for the coal blocks as it already owns rights to them.

However, the new coal-bed methane policy is yet to obtain the cabinet's approval.

Speaking on the topic, Rae said, "We will go to Cabinet with a new CBM policy and a policy for shale gas exploration in coming week. We want to boost natural gas output."

Rae also said that both CBM and shale gas would be priced as per the pricing formula suggested by the Rangarajan Committee. On June 27, the Cabinet Committee on Economic Affairs (CCEA) gave green signal to the new pricing-formula, which prescribes the price of a gas at an average cost of imported LNG and rates of the gas in international markets.

Based on the new formula, the price of natural gas will jump from $4.2 per million British thermal unit to $8.4 per million British thermal unit, from April 1 next year.