Reliance Plans Rs 43,000 Crore Coal Gasification Complex in Andhra Pradesh

Eluru's Deep Coal Deposits Anchor Reliance's Plan

Reliance Industries plans to invest about Rs 43,000 crore in an underground coal gasification complex in Andhra Pradesh, with an estimated 5,000 direct jobs and 35,000 indirect jobs. The project would use coal beneath the Chintalapudi Sector A1 and Recherla blocks in Eluru district to produce gas for energy and industrial use, instead of bringing the coal to the surface through conventional mining.

The two blocks contain an estimated 3,130.61 million tonnes of coal, with deposits reported to lie more than 600 metres below ground. Reliance secured them through the Ministry of Coal's 14th round of commercial auctions. Production and development agreements signed in April 2026 included provisions for underground coal gasification, part of India's first commercial auction tranche with such provisions.

The Rs 43,000 crore plan sits within a much larger potential investment of Rs 2.73 lakh crore, or Rs 273,000 crore. The spending schedule differs across investment outlines: one places that potential spending across three phases through 2030, while a proposal submitted to the state government spreads it over a project life of 30 years. Large investment beyond exploration and pilot work depends on successful testing and commercial viability.

For Andhra Pradesh, the immediate prospect is exploration, followed by a pilot to establish whether the deep coal can produce usable gas at a workable cost. The larger industrial complex, its employment benefits and its infrastructure would follow in stages if that work succeeds.

What the Investment Figures Cover

The Rs 43,000 crore outline divides initial spending into roughly Rs 3,000 crore for exploration and related activities, followed by Rs 40,000 crore for a pilot phase. Commercial development would come afterward. That initial programme was described as taking place over two years.

The proposal submitted to the Andhra Pradesh government uses a different division. It assigns up to Rs 3,000 crore to exploration and pilot work, Rs 120,000 crore to development during 2028 to 2030, and Rs 150,000 crore to production from 2030 onward. Those three amounts add up to Rs 273,000 crore.

The difference matters because exploration spending pays for learning about the resource, while development spending pays for building the facilities needed to use it. In the longer proposal, the development investment follows only if exploration succeeds. A subsequent implementation outline also places exploration and pilot work together within an initial budget of up to Rs 3,000 crore, with further investment to be worked out after the pilot.

A senior industry executive said Reliance was expected to sign a memorandum of understanding with the state government on a Thursday, although no calendar date was specified. Reliance did not respond to requests for comment. Confirmation of the agreement, a reconciled spending schedule and final gas pricing were not given.

How Coal Becomes Gas Underground

Underground coal gasification converts coal into synthesis gas, usually called syngas, while the coal remains beneath the ground. Syngas is a mixture containing gases such as hydrogen and carbon monoxide that can be used as fuel or as raw material for chemical production.

Wells connect the surface to the coal seam. Air or oxygen, sometimes with steam, is introduced to support reactions underground, and the resulting gas is brought to the surface through production wells. Surface gasification uses a different arrangement: coal is first mined and then converted into gas in industrial equipment above ground.

Reliance plans to use Controlled Retracting Injection Point technology, known as CRIP. In simple terms, the point where gasifying agents enter the coal seam is moved as work progresses, allowing fresh sections of coal to be reached. The pilot will test how the chosen technology performs in the geology of these blocks.

The attraction is access to coal that lies too deep for economical conventional mining. India's coal resources are estimated at about 360 billion tonnes, including roughly 160 billion tonnes considered too deep and economically unsuitable for conventional extraction. That makes the underground approach relevant to deposits that might otherwise remain unused.

Two Blocks, With Work Starting at Chintalapudi

Chintalapudi Sector A1 covers about 3,000 acres and contains an estimated 904.94 million tonnes of G-12 coal. Recherla covers about 5,500 acres and contains an estimated 2,225.67 million tonnes of G-13 coal. The grade labels describe categories based on the coal's heat value.

Recherla accounts for about 71% of the combined estimated coal, calculated from its 2,225.67 million tonnes out of the total 3,130.61 million tonnes. Together, the blocks cover about 8,500 acres, although that area describes the blocks rather than the eventual footprint of surface facilities.

Initial activity is planned at Chintalapudi, with work at the two blocks starting at different times. Exploration will help establish the underground conditions that determine how the project can be designed and operated. The next stages depend on both the resource assessment and the pilot's results.

When Exploration and Production Could Begin

The proposed timetable has changed between planning descriptions. The government submission placed exploration and pilot work between the third quarter of 2026 and the fourth quarter of 2027. A subsequent implementation outline set exploration to begin in January, without specifying the year, and targeted pilot completion by mid-2028, with exploration and testing proceeding together.

The main milestones are:

• April 2026: The Ministry of Coal signed production and development agreements covering Reliance's two blocks, with underground gasification provisions.
• Third quarter of 2026 to fourth quarter of 2027: The government submission scheduled exploration and pilot work, with spending of up to Rs 3,000 crore.
• January start and mid-2028 completion: A subsequent outline scheduled exploration to begin in January and the pilot to finish by mid-2028.
• 2028 to 2030: The government submission envisaged Rs 120,000 crore in development investment, conditional on successful exploration.
• From 2030 onward: The same submission envisaged Rs 150,000 crore during the production phase.

The pilot is the key decision point. Its results will help Reliance judge whether the gas can be produced reliably and whether the expected revenue can support the cost of development and operation.

What the Employment Estimates Mean for Andhra Pradesh

The headline employment estimate is 5,000 direct jobs and 35,000 indirect jobs. Reliance's proposal gives a wider range: 3,000 to 5,000 direct jobs once operations reach a stable level, alongside 20,000 to 35,000 indirect and induced livelihoods across the regional supply chain.

Direct jobs would be within the project itself. Indirect livelihoods would involve suppliers and contractors, while induced livelihoods would arise as workers spend their income in the surrounding economy. Those categories cover different kinds of economic activity, and the proposal ties its direct employment estimate to steady operations rather than the start of exploration.

The Andhra Pradesh Economic Development Board is expected to act as the coordinating agency. Its role would include working with state departments on land, water and electricity requirements and liaising with central ministries. That puts the board at the centre of arrangements needed to move from an underground resource to an operating industrial complex.

Water and Electricity Require Their Own Infrastructure

Reliance plans a desalination plant at Machilipatnam in Krishna district to supply water for the project. Desalination removes salt from seawater. The proposed plant is intended to meet substantial water needs without placing the same demand on local freshwater sources.

The pilot would initially use electricity purchased from the Andhra Pradesh grid. Reliance then plans a dedicated captive power plant for full production. A captive plant primarily supplies the industrial operation associated with it.

These plans show that the investment extends beyond wells and underground equipment. Gas production also needs dependable water and power, and both affect operating costs. The pilot's economics will therefore matter alongside its ability to produce gas.

Underground gasification reduces the need to excavate coal through conventional mining. Environmental management still has to address the underground reactions and the surface facilities, including groundwater protection, gas handling and water use. The commercial decision will need to account for the requirements of operating the whole complex.

A Different Route From the Surface Gasification Scheme

The Union Cabinet approved a Rs 37,500 crore incentive scheme in May 2026 for surface coal and lignite gasification, offering support of up to 20% of eligible plant and machinery costs. Adani Enterprises and NTPC are among the companies that have applied for incentives under that programme.

Reliance's Andhra Pradesh proposal uses underground gasification, while that scheme supports conversion facilities using coal or lignite brought to the surface. The two routes share the aim of making usable gas from coal, but require different equipment and project designs.

India's National Coal Gasification Mission has an objective of gasifying 100 million tonnes of coal by 2030. The broader policy seeks domestic sources of fuels and chemical raw materials that can reduce reliance on imports. Reliance's plan could contribute to that effort if exploration and the pilot support commercial development.

For Eluru, the next concrete step is work at Chintalapudi. The initial spending would establish how the resource performs; the much larger proposed investment would turn those results into production facilities. That staged process will determine the scale and timing of the benefits expected for Andhra Pradesh.

Key Points

• Reliance plans a Rs 43,000 crore underground coal gasification complex in Andhra Pradesh's Eluru district.
• A broader proposal envisages Rs 273,000 crore over 30 years, conditional on exploration results and commercial viability.
• Chintalapudi Sector A1 and Recherla contain an estimated 3,130.61 million tonnes of coal combined.
• Initial activity is planned at Chintalapudi, with a subsequent implementation outline targeting pilot completion by mid-2028.
• The proposal estimates 3,000 to 5,000 direct jobs at steady operations and 20,000 to 35,000 indirect and induced livelihoods.
• A desalination plant at Machilipatnam and a dedicated power plant are planned to support the complex.