Reliance’s proposed Eluru UCG project targets 3.13 billion tonnes of deep, unmineable coal, with ₹3,000 crore committed initially.
ELURU: Reliance Industries has submitted a proposal to the Andhra Pradesh government for an integrated Underground Coal Gasification (UCG) and downstream chemicals complex in Eluru district, carrying a cumulative outlay of approximately ₹2.73 lakh crore over 30 years. The scale of the number, however, obscures a more cautious reality. Of that total, only up to ₹3,000 crore is committed upfront, with the remaining ₹2.70 lakh crore released solely if an exploration and pilot programme running from the third quarter of 2026 through late 2027 proves the technology viable underground.
Reaching Coal That Cannot Be Mined
The project targets the Chintalapudi (Sector A1) and Recherla coal blocks, secured by RIL through the Ministry of Coal’s commercial auction process, together holding an estimated 3.13 billion tonnes of non-coking coal. These reserves sit more than 600 metres below the surface, well beyond the reach of open-cast or conventional underground mining. UCG sidesteps this limitation entirely: rather than extracting coal, the process ignites it in place, injecting oxidants through directional wells to convert the seam into syngas that is drawn to the surface for processing. The coal itself is low-grade, with high ash content that would be a liability in a conventional thermal plant. Underground, however, that ash stays buried, and the depth actually helps by containing gasification pressure within the seam. India holds close to 360 billion tonnes of coal resources, of which roughly 160 billion tonnes are considered unmineable by conventional means, so the approach could meaningfully expand the country’s usable energy base without new open-cast footprints.
Staging Capital as a Bet, Not a Commitment
The financial structure reads less like a construction budget and more like a real options strategy. Phase 1, capped at ₹3,000 crore, covers core drilling, seismic profiling and a pilot cavity to assess syngas quality. Only after a formal viability decision gate in early 2028 would Phase 2’s ₹1.2 lakh crore development spend begin, followed by ₹1.5 lakh crore for full commercial production from 2030 onward. By committing roughly one per cent of total project capital before deciding on the rest, Reliance limits its downside while retaining the option to scale if the geology and economics align. RIL has not publicly disclosed downstream off-take agreements, treating the plan as conditional rather than confirmed.
Feeding India’s Import-Heavy Chemicals Basket
Should the pilot succeed, syngas from Eluru could be routed into hydrogen, ammonia and urea, methanol, synthetic natural gas and Fischer-Tropsch liquid fuels. Each of these carries significant import exposure today: India imports more than half its natural gas consumption, 80 to 90 per cent of its methanol demand and nearly all its liquid ammonia. Gasifying 10 to 25 million tonnes of coal annually across the two blocks would meet 10 to 25 per cent of the National Coal Gasification Mission’s target of 100 million tonnes a year by 2030. The project also stands to benefit from a 50 per cent revenue-share rebate on coal used for gasification and sits within the policy space created by the Union Cabinet’s ₹8,500 crore viability gap funding scheme approved in January 2024, though that scheme’s initial focus has been surface gasification rather than UCG specifically.
A Technology With a Mixed Global Record
UCG’s history counsels caution alongside optimism. Uzbekistan’s Angren facility has run since 1955, demonstrating long-term feasibility. Elsewhere, results have been less encouraging: Linc Energy’s Chinchilla project in Australia was shut down following environmental litigation over subsurface leakage, and ONGC’s own Vastan pilot in Gujarat, pursued with Russian technical partners from 2004, was abandoned around 2016 after cost overruns and contractual disputes. RIL’s Eluru proposal marks the first attempt by a private Indian operator to commercialise deep UCG at scale, working with a geology that has not previously been tested this way in the country.
Groundwater, Subsidence and the Regulatory Gate
The central technical risk lies in containment. If cavity pressure exceeds surrounding groundwater pressure, gasification by-products, including phenols, benzene and other toxic compounds, can migrate into aquifers used for drinking water and irrigation in coastal Andhra Pradesh. Underground voids left behind also raise the possibility of surface subsidence over time. Before any construction proceeds, the project needs clearances from the Ministry of Environment, Forest and Climate Change, the Directorate General of Mines Safety, the Coal Controller’s Organisation and the Andhra Pradesh Pollution Control Board, alongside land and water allocations from state authorities.
What to Watch Next
The coming 12 to 24 months will reveal whether the project moves from proposal to reality. Readers can track progress through core sample and aquifer data disclosures, filings before the Environment Ministry’s Expert Appraisal Committee, public hearings in Eluru, and pilot syngas results expected through late 2027. Reliance’s quarterly capital expenditure guidance should also confirm whether Phase 1 funding is actually being deployed. Until the pilot concludes and a formal investment decision follows in 2028, the ₹2.73 lakh crore figure remains an outer boundary of ambition rather than a locked-in commitment, a distinction that will shape how this story is read for the next two years.
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