The public sector undertaking has signed an agreement with RIL to assess the feasibility and technical viability of converting lignite reserves through underground gasification. | Photo Credit: JOTHI RAMALINGAM B

NLC India Ltd (NLCIL) and Reliance Industries Ltd will jointly explore developing an underground lignite gasification project in Gujarat as part of efforts to augment domestic gasified fuel supplies amid the global fuel crunch, sources said.

The public sector undertaking has signed an agreement with RIL to assess the feasibility and technical viability of converting lignite reserves through underground gasification.

NLCIL holds two lignite blocks in Gujarat that would be considered for the project, they said. The preliminary technical studies for underground lignite gasification blocks with RIL are in progress, they said, adding that Reliance Industries was brought on board for its expertise in gasification technologies, sources said.

The move is aimed at partially addressing domestic gas shortage exacerbated by the ongoing global fuel crisis. If successful, the project could provide a supplementary source of synthesis gas for industrial use and potentially strengthen energy security by reducing dependence on imported liquefied natural gas (LNG).

NLCIL, a state-run miner and power producer, has been seeking alternative ways to monetise its lignite resources. Underground lignite gasification converts in-situ lignite into synthesis gas (a mixture of hydrogen, carbon monoxide and other gases) which can be used as fuel or as a feedstock in chemical and fertiliser industries.

A senior industry analyst said the partnership with Reliance Industries, which has prior experience in gasification projects and downstream gas handling, could accelerate project development and de-risk technical challenges.

The company is also planning to set up a lignite-to-methanol plant estimated at Rs 4,394 crore, at Neyveli, in Tamil Nadu which is likely to be completed by next year. The project is part of NLCIL's diversification plan.

The proposed lignite-to-methanol plant is in line with the Centre's coal gasification plan, a sustainable way of utilising the fuel to meet its ambitious net-zero plans.

The Union Cabinet approved a Rs 37,500 crore scheme this month to promote surface coal and lignite gasification projects, aiming to gasify around 75 million tonnes of coal. The scheme is intended to accelerate India's coal and lignite gasification programme and support the national target of gasifying 100 million tonnes of coal by 2030.

The scheme marks a major step towards strengthening energy security and reducing dependence on imports of key products such as LNG (more than 50 per cent imported), urea (20 per cent imported), ammonia (100 per cent imported), and methanol (80–90 per cent imported).

NLCIL is a public sector company engaged in lignite mining and power generation. Keeping face with the changing business trends, NLCIL has diversified into renewable energy and coal mining business in India and abroad.

Published on May 31, 2026