Revised CBG Pricing Aims to Boost Producers Without Hitting Consumers

The Ministry of Petroleum and Natural Gas has clarified that the revised pricing framework for Compressed Biogas (CBG) under the GOBARdhan Scheme is designed to ensure stable returns for producers while keeping the financial impact on CNG and household PNG consumers minimal.

The clarification comes in response to a newspaper report suggesting that the new price structure could impose a significant burden on consumers. The ministry maintains that the higher procurement price for CBG will not translate into a proportional increase for end-users.

Under the previous system, CBG producers were paid at a rate linked to 85 per cent of the retail selling price of CNG, which amounted to approximately Rs 1,478 per million British thermal units (MMBtu). The revised framework fixes the procurement price at Rs 2,110 per MMBtu, marking an increase of about 43 per cent.

However, the ministry emphasised that this is the price paid to producers and not the price charged to consumers. The government will provide an affordability support of Rs 10 per kg of CBG, which translates to roughly Rs 215 per MMBtu for CBG with 95 per cent methane content. After this support, the effective cost to be recovered through gas consumers would be around Rs 1,895 per MMBtu, about 28 per cent higher than the prevailing price.

The ministry further explained that CBG is not sold to city gas distribution entities at its procurement price. Instead, it is pooled with other domestically produced natural gas. The net cost of CBG will now be spread across a domestic gas base that is 2.5 to 3 times larger than the earlier base, which was limited to APM gas allocated to the CNG transport and domestic PNG segments.

This approach ensures that CBG producers receive a stable and viable price for sustainable plant operations, while government-funded support and the wider gas pool protect consumers from any material price impact. The revised framework balances the viability of CBG plants with consumer affordability, keeping the impact on individual gas consumers negligible.