Reliance Industries is planning to invest approximately ₹43,000 crore ($4.59 billion) in an underground coal gasification project in Andhra Pradesh, marking a major expansion of the conglomerate’s energy and industrial ambitions. According to a government document reviewed by Reuters, the proposed investment will be deployed in two phases to develop an integrated complex that converts deep underground coal reserves into usable gas without conventional mining.
The project could eventually attract total investments of approximately ₹2.7 lakh crore over its lifetime and generate around 5,000 direct and 35,000 indirect jobs. However, the larger investment will depend on the success of initial exploration, geological assessments, pilot demonstrations and regulatory approvals. The development also comes as Andhra Pradesh attracts major investments in artificial intelligence infrastructure, data centres, automobiles and energy.
Reliance Plans ₹43,000 Crore Investment in Two Phases
Reliance Industries plans to invest approximately ₹43,000 crore in the proposed underground coal gasification complex.
According to the government document cited by Reuters, the investment will be divided into two phases.
The first phase will require approximately ₹3,000 crore. It will focus on exploration, geological assessments and pilot demonstrations to determine whether underground coal gasification can work technically and commercially at the selected sites.
The second phase will involve an initial investment of approximately ₹40,000 crore. However, this stage will proceed only if the initial exploration and pilot programme succeeds and the company receives the necessary regulatory approvals.
The distinction is important because the entire ₹43,000 crore investment is not being committed unconditionally. Reliance must first establish that the technology can extract value from the underground coal reserves safely and economically.
Over the project’s lifetime, the total investment could reach approximately ₹2.7 lakh crore, making it a potentially significant industrial development for Andhra Pradesh.
Project Will Use Underground Coal Gasification Technology
The proposed facility will use Underground Coal Gasification (UCG), a technology that converts coal deposits deep below the Earth’s surface into combustible gas without physically extracting the coal through conventional mining.
In a conventional coal mine, companies extract solid coal and transport it to processing facilities. UCG follows a different approach.
The process involves injecting controlled amounts of oxygen or air, along with other suitable agents, into an underground coal seam. The coal reacts underground under controlled conditions, producing a gas mixture known as synthesis gas, or syngas.
The gas can then be brought to the surface and processed into different industrial products.
Depending on the technology and processing facilities, syngas can be used to manufacture:
- Hydrogen: An important industrial input with applications in refining and chemicals.
- Methanol: A chemical used in manufacturing, fuels and industrial processes.
- Ammonia: A major ingredient in fertilizer production.
- Synthetic natural gas: A substitute gas that can be used in certain energy applications.
- Other industrial chemicals: Products that can support downstream manufacturing.
For Reliance, the technology could create opportunities to connect domestic coal resources with its broader energy, refining and petrochemical businesses.
Chintalapudi and Recherla Coal Blocks Are Central to the Project
Reliance secured the Chintalapudi and Recherla coal blocks in Andhra Pradesh through commercial coal mine auctions conducted by the Ministry of Coal.
Both blocks are located in the Eluru district region and contain substantial deep-seated coal deposits.
Earlier reporting by The Economic Times estimated that the two blocks together contain approximately 3.13 billion tonnes of coal resources.
| Project detail | Information |
|---|---|
| Company | Reliance Industries |
| Location | Eluru district, Andhra Pradesh |
| Coal blocks | Chintalapudi and Recherla |
| Technology | Underground Coal Gasification |
| Initial two-phase investment | Approximately ₹43,000 crore |
| First-phase investment | Approximately ₹3,000 crore |
| Initial second-phase investment | Approximately ₹40,000 crore |
| Potential lifetime investment | Approximately ₹2.7 lakh crore |
| Estimated direct employment | 5,000 jobs |
| Estimated indirect employment | 35,000 jobs |
The depth of these coal deposits makes them particularly relevant to UCG. Some underground reserves may be difficult or uneconomical to extract using conventional mining methods.
The project aims to investigate whether these resources can be converted into valuable industrial feedstock without bringing the solid coal to the surface.
Project Could Generate 40,000 Direct and Indirect Jobs
The proposed complex could create approximately 5,000 direct jobs and 35,000 indirect jobs over its lifetime, according to the government document reviewed by Reuters.
Direct employment could include positions in engineering, geological research, plant operations, maintenance, safety management and industrial processing.
Indirect employment could emerge across construction, transportation, equipment supply, infrastructure development and other supporting industries.
The project could also create opportunities for local businesses and industrial suppliers as development progresses.
However, the employment estimates are projections associated with the proposed project. Actual job creation will depend on the scale of development, construction schedules and eventual commercial operations.
Why Reliance Is Betting on Coal Gasification
India remains heavily dependent on imported energy resources and industrial feedstocks.
The country imports substantial quantities of crude oil, natural gas and several chemicals used by its manufacturing and fertilizer industries.
Coal gasification offers one possible way to convert domestic coal resources into higher-value products that can support industrial production.
For Reliance, the opportunity extends beyond energy generation.
The company already operates major refining and petrochemical businesses. Access to syngas and its downstream products could potentially strengthen its industrial supply chain and create additional manufacturing opportunities.
The project also aligns with India’s broader National Coal Gasification Mission, which aims to achieve 100 million tonnes of coal gasification by 2030.
The government has introduced financial incentives for surface coal and lignite gasification projects to encourage investment in the sector. However, underground gasification involves different technical and regulatory considerations, and eligibility for individual incentives should not be assumed.
Underground Coal Gasification Faces Technical and Environmental Challenges
Despite its potential, underground coal gasification is a technically challenging process.
The technology requires operators to control chemical reactions deep underground while ensuring that the resulting gas can be collected safely.
Several risks need to be addressed before large-scale commercial operations become viable.
Groundwater contamination: If the underground gasification process is not properly controlled, chemicals and by-products could affect groundwater resources.
Gas leakage: Uncontrolled movement of gases through underground geological formations could create environmental and safety problems.
Land subsidence: Changes in underground coal formations could affect the stability of the ground above the gasification site.
Technical reliability: Operators must maintain stable underground reactions and consistently produce gas of suitable quality.
Commercial viability: The cost of exploration, gas production, processing and infrastructure must remain competitive with alternative energy and industrial feedstocks.
These challenges explain why Reliance is beginning with exploration and pilot demonstrations rather than immediately committing the full projected investment.
The success of the initial phase will be critical in determining whether the project advances towards large-scale development.
Andhra Pradesh Is Attracting Major Industrial Investments
Reliance’s proposed coal gasification complex adds to a growing pipeline of large investments in Andhra Pradesh.
The state has been attracting projects across technology, energy and manufacturing.
Google has committed approximately $15 billion towards a planned artificial intelligence hub in the state. Reliance and its joint venture partners have also announced plans involving approximately $11 billion in data-centre capacity.
Separately, Kia’s Indian unit announced plans for an additional manufacturing plant involving an investment of approximately $2 billion.
These developments reflect Andhra Pradesh’s efforts to position itself as an important destination for large industrial and infrastructure projects.
The state’s location, industrial land availability, port infrastructure and investment incentives could support further development across several sectors.
If Reliance’s gasification project progresses beyond its pilot stage, it could add another major component to the state’s industrial ecosystem.
The Bigger Picture
Reliance’s proposed coal gasification project represents a significant attempt to unlock domestic coal resources that may be difficult to exploit through conventional mining. By converting deep underground coal into syngas, the company hopes to create a new source of industrial feedstock for chemicals, fuels and other products.
The project also reflects India’s broader effort to strengthen energy security and reduce dependence on imported industrial inputs. However, the technology’s commercial success is not guaranteed. Environmental risks, underground operating conditions, infrastructure costs and regulatory approvals will determine whether the proposed investment can become a viable industrial business.
Looking Ahead
The immediate priority for Reliance will be completing the initial ₹3,000 crore exploration and pilot phase. The results will help establish whether the Chintalapudi and Recherla coal blocks can support commercial underground gasification. Only after successful technical demonstrations and the necessary approvals will the company proceed with the proposed second phase involving an initial investment of approximately ₹40,000 crore.
If the project succeeds, it could eventually become one of India’s most significant underground coal gasification developments and create new opportunities in chemicals, energy and industrial manufacturing. For now, the proposed ₹2.7 lakh crore lifetime investment should be viewed as a long-term potential rather than a confirmed spending commitment. The project’s real significance will depend on whether Reliance can turn deep coal reserves into a reliable, economically competitive and environmentally manageable source of industrial gas.
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