Govt Says Revised CBG Pricing Will Not Hit Consumers, Ensures Plant Viability

The Union Petroleum Ministry has moved to allay concerns that the revised offtake price for compressed biogas (CBG) could make the fuel significantly more expensive for consumers. The clarification follows the Union Cabinet's August 6 approval of the GOBARdhan scheme, which set a CBG offtake price of ₹2,110 per metric million British thermal unit (MMBTU).

The Ministry asserted that the new pricing framework is designed to offer CBG producers a stable and viable price, ensuring their operations remain sustainable. Crucially, it stated that the full offtake price will not be recovered from gas consumers.

To achieve this, the government will provide an affordability cushion of ₹10 per kilogram of CBG, which translates to roughly ₹215 per MMBtu for CBG with 95% methane content. With this financial support, the effective cost of CBG is brought down to ₹1,895 per MMBtu. This figure is still approximately 28% higher than the prevailing natural gas price of ₹1,478 per MMBtu.

The Ministry further explained that CBG will not be sold to city-gas distributors at the procurement price. Instead, it will be pooled with other domestically produced natural gas, with the cost distributed proportionally across the entire domestic gas pool.

This marks a shift from the previous system, where CBG costs were spread across a limited quantity of 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 that is approximately 2.5 to 3 times larger than before. The Ministry argued that this wider distribution will make the price impact on any individual gas consumer negligible.