Reliance Industries has unveiled a 30-year, ₹2.73 lakh crore investment plan to develop India’s first integrated Underground Coal Gasification complex in Andhra Pradesh. The project seeks to convert deep, inaccessible coal into syngas, aiming to lower import reliance for fertilizers and chemicals.
Reliance Industries Limited (RIL) has proposed a massive long-term investment plan of approximately ₹2.73 lakh crore over three decades to build India’s first integrated Underground Coal Gasification (UCG) complex. Located in the Eluru district of Andhra Pradesh, the project targets the Chintalapudi and Recherla coal blocks, which were secured by the company through government e-auctions. This initiative marks a significant strategic move to tap into domestic energy resources that are otherwise considered too deep or uneconomical to extract using conventional mining methods.
Phased Investment Strategy
The financial commitment is structured in phases to align with the project's development timeline. The company plans an initial investment of up to ₹3,000 crore between Q3 2026 and Q4 2027, which will be dedicated to exploration and pilot testing to determine the commercial viability of the site. If these early stages prove successful, the plan entails a major development phase of ₹1,20,000 crore between 2028 and 2030. This would be followed by a production phase investment of ₹1,50,000 crore starting from 2030 onwards. This gradual approach allows the company to assess technical challenges before committing full-scale capital.
Why Underground Coal Gasification Matters
Underground Coal Gasification is an in-situ technology that transforms coal located deep underground—often at depths exceeding 600 metres—directly into synthesis gas, or syngas. India has significant coal reserves, but many deposits are too deep for traditional extraction. By using UCG, RIL aims to produce syngas, which is a versatile raw material used in the production of fertilizers, chemicals, and energy. Successfully executing this could help India reduce its import dependency for these essential commodities, shielding the domestic economy from the volatility of global crude oil and energy prices.
Execution and Long-Term Risks
For investors, the scale and the nature of this project introduce specific complexities. As the first of its kind in India, the project faces technical hurdles related to large-scale UCG implementation, which is still a developing field globally. Furthermore, any coal-based project is subject to rigorous environmental and regulatory scrutiny. While the government is actively promoting coal gasification to enhance energy security, the company must ensure compliance with evolving emission standards and land use regulations over the next 30 years.
From a financial perspective, while the total investment amount is large, it is spread over three decades, meaning the immediate impact on the company's cash flow will be limited to the initial exploration phase. The project’s success will depend on how efficiently the company can convert these deep-seated, stranded coal reserves into commercially viable energy products compared to traditional imports or alternative energy sources. Investors will likely track the outcomes of the exploration and pilot phase, which is expected to run through late 2027, to gauge the feasibility of the subsequent, much larger capital expenditure.