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

The Union Petroleum Ministry has reassured the public that the revised offtake price for compressed biogas (CBG) will not have a significant impact on the cost of the fuel. This comes after concerns were raised that the CBG price would become more expensive with the new pricing framework. The government introduced the CBG offtake price of ₹2,110 per metric million British thermal unit (MMBTU) in a scheme called GOBARdhan, which was approved by the Union Cabinet on August 6.

The revised pricing framework aims to provide CBG producers with a stable and viable price, ensuring their operations remain sustainable. While the full offtake price would not be recovered through gas consumers, the government has offered an affordability cushion of ₹10 per kilogram of CBG, which amounts to around ₹215 per MMBtu of CBG, given its 95% methane content. Consequently, the CBG price stands at ₹1,895 per MMBtu, which is approximately 28% higher than its current price of ₹1,478 per MMBtu.

The Petroleum Ministry clarified that CBG is not sold at the procurement price to city-gas distributors but is instead pooled with other domestically produced natural gas. The cost is then distributed based on the proportionality in the domestic gas pool. By spreading the CBG cost across a larger gas pool, the price impact on individual gas consumers will be negligible.

This is a significant improvement from the previous practice of spreading the CBG cost across a limited quantity of the administered price-mechanism gas allocated to CNG (transport) and PNG (domestic) segments.