Reliance Industries Ltd (RIL) has signed a memorandum of understanding with the Andhra Pradesh government to invest ₹43,000 crore over the next two years in an underground coal gasification project in Eluru district, marking a major proposed industrial development centred on the Chintalapudi and Recherla coal blocks.
The project has an estimated investment potential of ₹2.7 trillion, or ₹2.7 lakh crore, across three phases over its lifetime. RIL secured the two coal blocks through a Coal Ministry e-auction to develop what the company has described as India’s largest-scale underground coal gasification project. It is expected to generate around 5,000 direct jobs and 35,000 indirect jobs, according to the details of the agreement reported by Business Standard.
The first phase will involve an investment of ₹3,000 crore for exploration, evaluation, pilot demonstration and feasibility assessment. This stage is intended to test the technology’s technical performance, safety, environmental safeguards and commercial feasibility before the project moves to full-scale development.
The results of Phase 1 will determine the project’s eventual scope, location, infrastructure requirements and investment case. The memorandum states that a detailed project report will be submitted after the successful completion of the first phase and the subsequent submission of a mining plan to the Ministry of Coal.
Phase 2 is expected to involve commercial development and production, with an initial investment of around ₹40,000 crore. If the pilot and feasibility work is successful, the project would be developed in multiple stages as an integrated underground coal gasification complex. The agreement does not establish the final scale or configuration of the complex, which will depend on the technical and commercial assessments.
Unlike conventional surface coal gasification, underground coal gasification converts coal deposits below the earth’s surface into gas without extracting the coal through conventional mining. The gas is brought to the surface through wells and can be used as an energy source or industrial feedstock. RIL said it would use the latest technology to gasify coal in the two blocks.
The Andhra Pradesh Economic Development Board will act as the nodal agency for the project. Its responsibilities will include coordinating with state government departments on land, water and power requirements, as well as liaising with central ministries. These requirements place the project within the wider industrial infrastructure system of the state, beyond the coal blocks themselves.
The agreement follows the signing of Coal Mine/Block Production and Development Agreements with RIL by the Ministry of Coal in April 2026. The two agreements were the first tranche of commercial coal mine agreements in India to include provisions for underground coal gasification, according to the report.
The proposed project comes as the Union government promotes coal gasification as a way to reduce dependence on imported fuels and chemicals. In May 2026, the Union Cabinet approved a ₹37,500 crore incentive scheme for surface coal and lignite gasification projects, offering financial support of up to 20 per cent of eligible plant and machinery costs. That scheme is separate from RIL’s proposed underground gasification project.
RIL’s entry places it alongside companies including Adani Enterprises and state-backed NTPC, which have applied for incentives under the government’s surface coal gasification programme. The next formal milestones for the Andhra project are the Phase 1 assessment, the mining plan and the detailed project report required before any large-scale commercial development can proceed.
