The Ministry of Coal has signed India’s first Coal Mine Development and Production Agreements (CMDPAs) with built-in provisions for Underground Coal Gasification (UCG), marking a major shift in the country’s coal strategy. These agreements were signed under the 14th round of commercial coal auctions and allow energy extraction from coal seams that are too deep, thin, or technically difficult for conventional mining.
Unlike traditional mining, UCG converts coal into synthetic gas (syngas) directly underground by injecting controlled air and steam into coal seams. This avoids the need to physically extract coal and makes previously “unworkable” reserves economically useful. The resulting syngas can be used as a domestic feedstock for producing urea, ammonia, methanol, and synthetic fuels, helping reduce India’s dependence on imported natural gas, LNG, and naphtha.
Under this framework, Reliance Industries Limited secured the Recherla and Chintalpudi Sector A1 mines in Andhra Pradesh, while Axis Energy Ventures won the Dip Extension of Belpahar and Tangardihi East mines in Odisha. These are the first commercial coal blocks in India where UCG provisions have been formally embedded into mining agreements.
With these four new agreements, the total number of commercial coal mine agreements signed in India has reached 138 mines, representing a peak rated capacity of 331.544 million tonnes per annum (MTPA). The broader commercial mining programme is expected to attract around ₹48,231 crore in capital investment, generate approximately 4.34 lakh direct and indirect jobs, and create projected annual revenue of nearly ₹42,980 crore.
The move reflects a wider policy shift, from coal as a fuel for direct combustion to coal as a strategic industrial feedstock, supporting fertilizer security, chemical manufacturing, and domestic energy resilience.
Key Commercial and Technical Benchmarks
UCG Pioneers: Reliance Industries (2 mines) and Axis Energy Ventures (2 mines) are the first to operate under UCG-embedded CMDPAs.
Geographic Scope: Mines located across Andhra Pradesh and Odisha, covering both fully and partially explored blocks.
Total Portfolio: 138 commercial mines now signed; projected capital investment of ₹48,231 crore.
Employment Potential: These projects are expected to create direct and indirect jobs for 4.34 lakh persons.
Value Addition: Targeted production of Urea, Ammonia, and Methanol to substitute imported petrochemical feedstocks.
Resource Expansion: UCG enables energy recovery from "unworkable" seams, significantly increasing India's exploitable energy base.
What is "Underground Coal Gasification (UCG)"?
Underground Coal Gasification (UCG) is an industrial process that converts coal into a combustible gas (syngas) while the coal is still in the ground. Unlike traditional mining, where coal is dug up and transported to a factory, UCG involves drilling two wells into a coal seam.
Air or oxygen is injected into one well to ignite the coal under controlled conditions. The resulting chemical reaction turns the solid coal into a gas, which is then pumped to the surface through the second well. This gas can be used to generate electricity or as a raw material for making chemicals and fertilizers.
Policy Relevance
Food Security: By producing syngas for Urea and Ammonia production, UCG helps insulate Indian farmers from global fluctuations in the price of imported fertilizers.
Reducing Import Bill: UCG syngas acts as a domestic substitute for imported Natural Gas and Naphtha, directly supporting India’s objective of reducing energy and petrochemical imports.
Unlocking "Dead" Assets: Large reserves of coal in India are trapped in deep or thin seams that traditional mining cannot reach. UCG turns these economically unviable resources into active energy assets.
Circular Economy: The technology allows for cleaner energy production with a smaller surface footprint compared to massive open-cast mines, aligning with India's Energy Transition goals.
Petrochemical Self-Reliance: Domestic production of Methanol and Dimethyl Ether (DME) from UCG syngas provides the building blocks for India’s synthetic fuel and chemical manufacturing sectors.
Relevant Question for Policy Stakeholders: How can the Ministry of Coal collaborate with the Ministry of Chemicals and Fertilizers to create 'Pit-head Urea Plants' that directly utilise UCG syngas to eliminate transportation costs and lower fertiliser subsidies?
Follow The Full News Here: Coal Mine Development Agreements with UCG Provisions Signed