India has 298.914 billion tonnes of coal resources and 43.215 billion tonnes of lignite resources. Underground Coal Gasification (UCG) can be used to extract the deep and un-minable coal and lignite resources in India. Total 120.666 billion tonnes coal resources and 20.98 billion tonnes lignite resources are confined to the depth greater than 300 m which would be the potential resources for UCG. A simple approach has been developed for economic evaluation of UCG project. The UCG module can be considered to consist of two vertical wells. An equilibrium model based on elemental composition of coal is used to predict the gas quality and yield. Based on a single UCG module dimensions, syngas production and power generation per module are calculated. The capital and operating costs are estimated for 100 MW UCG power plant with the multiple UCG modules. Three Indian coal samples-one sub-bituminous coal (C) and two lignites (A and B) are used to estimate the capital and operating costs of 100 MW UCG power plant. The capital costs are in the range of $210-246millions. The estimated costs of clean syngas production per GJ are $1.34, $0.90 and $1.73 for sample A, B and C respectively. The estimated electricity generation costs per MWh using UCG syngas are $24.27, $19.10 and $28.11 for sample A, B and C respectively. (C) 2014 Elsevier Ltd. All rights reserved.