The proposal comes as India tries to extract extra worth from its large coal useful resource whereas decreasing dependence on imported fuel and chemical feedstocks. For Reliance, it’s a putting new transfer into coal sources, though the corporate just isn’t proposing to develop into a traditional coal miner.
Additionally Learn: RIL proposes Rs 2.73 lakh crore investment for India’s first coal gasification complex in Andhra
However can Reliance make underground coal gasification work at business scale in Indian situations and, if it does, will the ensuing fuel and chemical compounds can materially scale back India’s vulnerability to exterior power shocks.
What Reliance has proposed
Reliance has secured the Chintalapudi and Recherla coal blocks in Andhra Pradesh by means of a coal ministry e-auction and has proposed creating an built-in Underground Coal Gasification, or UCG, advanced in Eluru district, as per an ET report based mostly on sources. RIL didn’t reply to ET’s electronic mail requesting remark.
The potential funding is pegged at Rs 2.73 lakh crore over 30 years, however it’s conditional on exploration establishing that the venture is technically and commercially viable.
The proposal has three levels. Exploration and pilot work from Q3 2026 to This autumn 2027 would contain as much as Rs 3,000 crore. If that succeeds, Reliance proposes Rs 1.2 lakh crore of growth spending throughout 2028-30 and Rs 1.5 lakh crore within the manufacturing part from 2030 onwards. These are figures within the proposal submitted to the Andhra Pradesh authorities, as reported by ET.The 2 blocks are giant. Chintalapudi covers about 3,000 acres and is estimated to comprise 904.94 million tonnes of G-12 grade coal. Recherla covers 5,500 acres and has an estimated 2,225.67 million tonnes of G-13 coal. The estimates quantity to three.13 billion tonnes. Officers informed ET the deposits lie greater than half a kilometre underground.
The most important financial significance lies within the firm extracting fuel from the coal with out typical mining.
Additionally Learn: Coal gasification key to build long-term resilience against global energy shocks: Experts
How underground coal gasification works
In typical coal gasification, coal is mined and delivered to the floor earlier than being transformed into fuel. Underground coal gasification (UCG) turns the coal seam itself into the gasification reactor.
Wells are drilled into the underground coal seam. An oxidising agent comparable to air, oxygen or steam is injected by means of one properly. The coal is partially combusted and undergoes chemical reactions underground. One other properly brings the ensuing fuel to the floor. The principle product is syngas, or synthesis fuel. It isn’t the identical as pure fuel. Syngas sometimes accommodates hydrogen and carbon monoxide together with various portions of methane and carbon dioxide. Its significance lies in what could be constituted of it.
Syngas could be processed into hydrogen, methanol, ammonia, artificial pure fuel and artificial fuels. Authorities paperwork additionally determine purposes in fertiliser manufacturing and as decreasing fuel for steelmaking. For instance, syngas could be shifted to extend its hydrogen content material. That hydrogen can be utilized to make ammonia, which is a significant fertiliser feedstock. Syngas will also be transformed into methanol. By way of methanation, it may possibly produce artificial pure fuel, or SNG, which is actually methane-rich fuel that may substitute for pure fuel in appropriate purposes.
This implies Reliance doesn’t essentially need to promote the fuel as a gas. It might use the syngas as a platform for producing higher-value industrial merchandise.
Why this issues to India
India’s dependence on imported fuel is substantial. The federal government mentioned in Could 2026 that greater than half of India’s LNG, round 20% of its urea, virtually all of its ammonia and round 80-90% of its methanol necessities are met by means of imports. That creates a number of factors of vulnerability.
Home gasification might doubtlessly scale back LNG demand by means of SNG manufacturing. It might present hydrogen for ammonia and fertiliser manufacturing. Methanol manufacturing might substitute for imports. Syngas-derived decreasing fuel might additionally discover industrial purposes. The worth is due to this fact broader than electrical energy era. Coal is being transformed right into a gaseous feedstock that may enter a number of industrial chains. India’s import invoice for key merchandise that coal gasification might doubtlessly substitute, together with LNG, urea, ammonium nitrate, ammonia, coking coal and methanol, was roughly Rs 2.77 lakh crore in FY2025, as per a authorities launch.
For Reliance, this downstream flexibility is especially essential as a result of the corporate already has giant refining and petrochemical operations. Its curiosity is doubtlessly much less about changing into a coal producer and extra about gaining one other home supply of carbon and power feedstock.
India’s coal-gasification mission
India has mentioned coal gasification for many years, however authorities coverage has develop into way more aggressive lately. In January 2024, the Union authorities permitted an Rs 8,500 crore monetary incentive scheme for coal and lignite gasification tasks. The scheme covers authorities PSUs, personal firms and demonstration tasks.
The nationwide goal is to achieve 100 million tonnes of coal gasification by 2030. The sector is rising however stays properly in need of that ambition. The federal government has been supporting tasks involving Coal India, BHEL, GAIL, BPCL, Talcher Fertilisers and personal firms.
In Could 2026, the Cupboard permitted a a lot bigger Rs 37,500 crore scheme for floor coal and lignite gasification tasks. The federal government expects the scheme to assist tasks utilizing about 75 million tonnes of coal and lignite and supply incentives of as much as 20% of eligible plant and equipment prices, topic to scheme limits.
That is essential for Reliance, however there could possibly be a catch. The Rs 37,500 crore scheme is particularly for floor coal and lignite gasification. Reliance is proposing underground coal gasification. Due to this fact, it shouldn’t be assumed that RIL will robotically qualify for the brand new surface-gasification subsidy.
UCG does, nevertheless, have separate coverage assist. The federal government has had a UCG coverage since 2016 and has launched provisions that encourage gasification of coal in business mining. In April 2026, the Ministry of Coal introduced the primary tranche of coal mine growth agreements carrying embedded UCG provisions.
The federal government has additionally offered a 50% revenue-share rebate for coal used for gasification below specified situations. That could possibly be economically related to Reliance, relying on the phrases relevant to its blocks and the eventual venture configuration.
So the coverage atmosphere is clearly supportive of gasification, however Reliance’s UCG venture is probably not handled as a direct beneficiary of each incentive created for floor gasification.
How huge might Reliance’s contribution be?
Reliance has not disclosed how a lot coal it intends to gasify annually or how a lot syngas it expects to supply. Due to this fact, there is no such thing as a firm manufacturing forecast but. However the scale could be illustrated.
If the whole 3.13 billion tonnes of underground coal have been gasified evenly over 30 years, the common can be about 104 million tonnes of coal a 12 months. That’s roughly equal to India’s complete 100-MT nationwide gasification goal for 2030.
That doesn’t imply Reliance will gasify 104 MT a 12 months. It’s merely the mathematical implication of spreading the whole geological estimate over the proposed venture life.
A extra conservative situation exhibits why even partial utilisation might matter. If 10% of the estimated useful resource have been gasified over 30 years, the common can be about 10.4 MTPA, or roughly 10% of India’s 100-MT goal. At 25% utilisation, it will be about 26 MTPA, equal to 26% of the nationwide goal.
These are simply situations, and never Reliance steerage. The precise quantity will rely upon exploration, restoration charges, gasification efficiency and economics.
The most important threat is underground
UCG’s attraction can be its largest uncertainty. The coal is greater than 600 metres deep, which makes typical mining troublesome or uneconomic. However turning that underground seam right into a managed gasifier might create its personal technical issues. The coal seam wants appropriate thickness, continuity and permeability. The encompassing geology issues. Groundwater situations matter. Faults and fractures can have an effect on the gasification cavity. Operators should additionally management fuel leakage and potential subsidence. Analysis on UCG has recognized groundwater contamination, fuel leakage and subsidence as essential dangers. Industrial-scale deployment stays extremely site-specific.
That’s the reason Reliance’s first Rs 3,000 crore is extra essential than the headline Rs 2.73 lakh crore determine.
The corporate first must show that it may possibly create and management the underground response and produce a sufficiently constant syngas stream at a suitable value. If that works, the bigger growth funding turns into credible. If it doesn’t, a lot of the proposed Rs 2.73 lakh crore might by no means be spent.
Can Ambani’s underground guess save India from power shocks?
India’s power demand is anticipated to rise as industrialisation and family consumption improve. Renewables can provide an growing share of electrical energy, however they can’t eradicate the necessity for molecules utilized in fertilisers, chemical compounds, refining, metal and different industrial processes. Meaning India will proceed to want fuel and gas-derived merchandise at the same time as its energy system turns into cleaner.
Coal gasification presents one potential home supply. If UCG produces economically aggressive syngas, India might use it to make SNG and scale back some LNG imports. Hydrogen from syngas might assist home ammonia manufacturing. Methanol might exchange imports. Industrial fuel might assist metal and chemical manufacturing.
It will not make India utterly self-sufficient. Nor would coal gasification eradicate the nation’s publicity to worldwide power costs. But it surely might present a further home supply of vital molecules. That will be a giant issue throughout geopolitical disruptions. A rustic importing LNG, ammonia and methanol is uncovered not simply to commodity costs but additionally to delivery constraints, foreign money actions and disruptions to main commerce routes.
The federal government’s personal rationale for coal gasification is partly based mostly on decreasing these import dependencies. Its Could 2026 announcement explicitly linked the programme to decrease dependence on imported LNG, urea, ammonia and methanol.
