Gujarat: NLC India Limited and Reliance Industries Limited have entered into a joint agreement to explore an Underground Coal/Lignite Gasification (UCG) project in Gujarat. The initiative aims to convert deep lignite reserves directly into synthesis gas (syngas) without conventional mining.
The collaboration is designed to unlock domestic energy resources, reduce import dependence, and strengthen India’s long-term energy security.
Feasibility Studies Underway
Both companies have initiated technical and commercial feasibility studies to evaluate the project’s viability. These studies will focus on:
- Geological suitability of lignite seams in Gujarat
- Expected gas yield and quality
- Environmental impact assessment
- Economic feasibility and project costs
- Operational safety and long-term sustainability
The findings will determine the future roadmap, including potential investment commitments and execution timelines.
How Underground Lignite Gasification Works
Underground lignite gasification involves injecting oxygen and steam into lignite seams located deep underground. This process converts the coal into syngas, a mixture primarily composed of hydrogen, carbon monoxide, and methane.
The produced syngas is then extracted to the surface and can be used for:
- Power generation
- Industrial fuel applications
- Fertiliser production
- Chemical manufacturing
Compared to traditional mining, the process significantly reduces surface disturbance and avoids large-scale excavation.
Leveraging Combined Expertise
The partnership brings together complementary strengths:
- NLCIL contributes its experience in lignite mining and ownership of lignite blocks in Gujarat
- Reliance brings advanced gasification and large-scale energy processing expertise developed through its industrial operations
This synergy is expected to enhance technical efficiency and improve the chances of successful deployment of UCG technology in India.
Boost to India’s Energy Security Goals
The project aligns closely with India’s National Coal Gasification Mission. It also supports broader government efforts to reduce dependence on imported fuels such as liquefied natural gas (LNG), ammonia, methanol, and urea.
If successful, the initiative could:
- Strengthen domestic fuel availability
- Reduce exposure to global energy price volatility
- Support cleaner utilization of coal resources
- Enhance industrial feedstock security
Growing Momentum in Coal and Lignite Gasification
The announcement comes amid India’s renewed push for gasification projects. The Union government has already approved a ₹37,500 crore incentive scheme aimed at promoting coal and lignite gasification, targeting large-scale conversion of coal reserves into cleaner fuel alternatives.
The national goal is to gasify up to 100 million tonnes of coal by 2030, signaling strong policy backing for such technologies.
Positive Market Sentiment
The agreement has been received positively by market participants, who view it as a strategic move toward energy diversification and technological innovation. Investors are closely watching the outcome of feasibility studies, which will determine the scale and commercial potential of the project.
About NLCIL
NLC India Limited is a leading Indian public sector enterprise engaged in lignite mining, coal mining, thermal power generation, and renewable energy development. Headquartered in Neyveli, Tamil Nadu, the company operates under the Ministry of Coal and holds Navratna status. NLC India is rapidly expanding its renewable energy portfolio while strengthening its conventional power and mining operations across India.
