No material price impact on CBG with revised offtake framework, ensures plants operate sustainably: Govt.

Addressing concerns about compressed biogas (CBG) becoming increasingly expensive with the revised offtake price, the Union Petroleum Ministry assured the pricing cushioned with government-funded support and stacking with a substantially wider gas pool would avert any material price impact.

The Union Cabinet August 6 approved the GOBARdhan scheme that introduced CBG offtake price of ₹2,110 per metric million British thermal unit (MMBTU).

Responding to a media report, it added that the revised pricing framework seeks to provide CBG producers with a “stable and viable” price that would enable them to operate “sustainably”.

The ministry clarified that full offtake price would not be recovered through gas consumers.

It explained that the government would provide an affordability cushion of ₹10 per kilogram of CBG – which equates to about ₹215 per MMBtu of CBG with 95% methane content.

Effectively, with the financial support, the cost of CBG would stand at ₹1,895 per MMBtu.

This would be approximately 28% higher than the prevailing price of ₹1,478 per MMBtu.

The Petroleum Ministry also argued that CBG is not sold at the procurement price to city-gas distributors. It is pooled with other domestically produced natural gas, and the cost is spread based on the proportionality in the domestic gas pool.

Previously, the cost of CBG was spread across a limited quantity of the administered price-mechanism gas allocated to the CNG (transport) and PNG (Domestic) segments.

“Under the new framework, the net cost of CBG will be spread across a domestic gas base approximately 2.5 to 3 times larger than the earlier base,” it stated, adding, “Due to the spreading of CBG cost on a much larger gas pool, the price impact on an individual gas consumer will be negligible.”

natural gas / oil and gas - downstream activities