Coal blocks get underground gasification clause, a first

India signs its first commercial coal mine agreements carrying embedded Underground Coal Gasification provisions — coal turned to gas without ever digging it out.

What happened

• The Ministry of Coal executed Coal Mine/Block Production and Development Agreements (CMDPAs) for four coal mines — the first-ever commercial coal mines in India to carry embedded provisions for Underground Coal Gasification (UCG).
• The four mines were allotted under the 14th round of commercial coal mining auctions. Two of the blocks are partially explored and two are fully explored.
• Reliance Industries Limited secured the Recherla and Chintalpudi Sector A1 mines; Axis Energy Ventures India Private Limited bagged the Dip Extension of Belpahar and Tangardihi East mines.
• The blocks lie across Andhra Pradesh and Odisha.
• With these signings, total commercial coal auction agreements reach 138 mines, with peak rated capacity of 331.544 MTPA, projected annual revenue of about ₹42,980 crore, investment of about ₹48,231 crore, and roughly 4,34,175 direct and indirect jobs.
• The significance is not the auction itself but the clause: for the first time a commercial coal contract allows the awardee to gasify the coal underground instead of mining it conventionally.

Background & context

India holds one of the largest coal reserves in the world, yet a substantial share of that resource sits in seams that conventional opencast or underground mining cannot reach economically — seams that are too deep, too thin, of poor quality, or structurally difficult to work. The traditional model extracts the solid coal, transports it, and burns or processes it elsewhere; the deep and unworkable seams are simply left in the ground as stranded resource. Underground Coal Gasification is the technology that targets exactly this stranded fraction.

The commercial coal mining regime itself is the policy backdrop. For decades coal mining in India was effectively a state monopoly anchored in the Coal Mines (Nationalisation) Act, 1973, with Coal India Limited as the dominant producer. The opening of the sector to commercial mining followed amendments to the Mines and Minerals (Development and Regulation) Act, 1957 and the Coal Mines (Special Provisions) Act, 2015 through the Mineral Laws (Amendment) Act, 2020, which permitted commercial coal mining by any company on a revenue-share basis, removing the earlier end-use restriction that had tied coal blocks to captive uses such as power or steel. The commercial auctions launched in 2020 are the vehicle through which private and public players bid for blocks; the round referenced here is the 14th tranche of that programme, and the CMDPA is the contract instrument that binds the successful bidder to a development and production schedule.

Allowing UCG inside these agreements is the new element. It signals that the regulatory framework now recognises in-situ conversion as a legitimate way to monetise a coal block, not merely physical extraction. That widens what a coal lease can mean — from a permission to dig to a permission to convert the resource in place.

It also fits into a wider family of cleaner-coal and gas-economy initiatives the Coal Ministry has pursued. Alongside the commercial auctions, the policy direction has included a push on surface coal gasification — with stated national-level gasification capacity ambitions — and on diversifying coal use beyond direct combustion in thermal power. UCG sits at the more experimental end of that spectrum: where surface gasification is an established industrial route used in several countries, in-situ underground gasification has been attempted at pilot and demonstration scale globally but has rarely sustained large commercial operation. Reading the move against that family makes its character clear — it is a deliberate technology bet placed inside a mature auction mechanism, designed to test whether stranded coal can be converted to gas economically and safely under Indian conditions.

For Prelims

• UCG — what it is: Underground Coal Gasification converts coal into synthetic gas (syngas) in situ, inside the coal seam itself, without bringing the coal to the surface and without conventional mining.
• How it works (concept): the coal seam is accessed by boreholes; an oxidant (air, oxygen or steam) is injected and the coal is partially combusted/gasified underground, and the resulting gas is drawn up a production well. The product is a mixture dominated by hydrogen, carbon monoxide, methane and carbon dioxide.
• Syngas end-uses (from the release): it can serve as a domestic feedstock for urea and ammonia (reducing fertiliser imports), and can replace imported natural gas and naphtha for the production of methanol, dimethyl ether (DME) and synthetic fuels.
• The instrument: a CMDPA — Coal Mine/Block Production and Development Agreement — is the contract the Ministry of Coal signs with the successful bidder of a commercial coal block; here, four CMDPAs carried UCG provisions for the first time.
• The mines & winners: Reliance Industries → Recherla, Chintalpudi Sector A1; Axis Energy Ventures India → Dip Extension of Belpahar, Tangardihi East. States: Andhra Pradesh and Odisha.
• The programme: these were signed under the 14th round of commercial coal auctions; cumulative tally now 138 mines · 331.544 MTPA peak capacity · ~₹42,980 cr projected annual revenue · ~₹48,231 cr investment.
• Nodal ministry: Ministry of Coal, Government of India.
• What it unlocks: deep, thin, poor-quality or otherwise unworkable seams that conventional mining cannot reach economically.

Why it matters

The problem UCG addresses is twofold: a large stranded-resource problem and an import-dependence problem. On resource, conventional mining can economically recover only the accessible fraction of a coal reserve; deep and thin seams stay locked. By converting coal to gas where it lies, UCG can in principle monetise reserves that would otherwise never contribute to the economy, while avoiding the surface footprint, overburden handling and land disturbance of opencast mining.

On imports, the syngas pathway speaks directly to India's energy and fertiliser security. The country imports large volumes of natural gas (as LNG), naphtha and urea/fertiliser feedstock. If domestically produced syngas can substitute for these in making ammonia, urea, methanol and DME, the foreign-exchange outflow and the exposure to volatile global gas prices both fall. Syngas is also a recognised building block for hydrogen and for synthetic liquid fuels, which links the move to the broader gas-economy and clean-fuel ambitions. Embedding the option in the auction contract rather than treating it as a one-off pilot is what makes this a structural step: it tells future bidders that in-situ conversion is now a permitted commercial route, which can pull private capital and technology into a space that has historically struggled to scale anywhere in the world. The honest caveat — which the policy framing itself implies — is that UCG remains technically demanding: controlling the underground reaction, preventing groundwater contamination, and managing subsidence and carbon emissions are real challenges, and global commercial track records are mixed. So the agreements are best read as opening a door, not as a settled production technology.

For Mains

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