India’s First UCG Coal Mine Agreements Signed with Reliance Industries, Axis Energy

The Ministry of Coal has executed Coal Mine Development and Production Agreements (CMDPAs) for 4 coal blocks under the 14th round of commercial coal auctions, as per a PIB report.  

These are the first blocks to be awarded with provisions for Underground Coal Gasification (UCG). The allocations have been made to Reliance Industries Limited and Axis Energy Ventures India Private Limited.  

Reliance Industries has secured the Recherla and Chintalpudi Sector A1 mines, while Axis Energy Ventures has been awarded the Dip Extension of Belpahar and Tangardihi East mines. 

Location and Exploration Status 

The 4 mines are located across Andhra Pradesh and Odisha. Of these, 2 are categorised as fully explored, while the remaining 2 are partially explored.  

This classification shows the level of geological assessment completed prior to allocation. 

First Inclusion of UCG in Commercial Mining 

The agreements include UCG provisions for the first time in India’s commercial coal mining framework. UCG involves converting coal into synthetic gas within the seam, without extracting it through conventional mining methods. 

This approach allows the use of coal reserves that are otherwise difficult to mine, including deposits that are deeper or thinner in structure. It also reduces the need for surface-level extraction activities. 

Industrial Applications of UCG Output 

The synthetic gas produced through UCG can be used as an input in fertiliser and chemical production. It can support the manufacture of urea and ammonia, which are currently dependent on imports to some extent. 

It may also be used as a substitute for natural gas or naphtha in producing methanol, dimethyl ether, and synthetic fuels, depending on project-level execution. 

Auction Programme and Output Estimates 

Following the signing of these agreements, the total number of CMDPAs under commercial coal auctions has reached 138. These mines have a combined peak rated capacity of 331.544 million tonnes per annum. 

They are estimated to generate annual revenue of around ₹42,980 crore and attract investments of about ₹48,231 crore. Employment generation, both direct and indirect, is projected at approximately 4.34 lakh. 

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Conclusion 

The inclusion of UCG provisions adds a new method of coal utilisation within the existing auction framework. The allocations form part of the commercial coal mining programme. 

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