The government will provide ₹10 per kg affordability support to CBG producers, reducing the effective cost recovered through the gas pool.
A wider domestic gas pool will further limit the impact of revised CBG pricing on individual consumers.
Highlights
- The government has fixed the Compressed Biogas (CBG) procurement price at ₹2,110 per MMBtu under the GOBARdhan Scheme.
- Under the existing mechanism, producers receive around ₹1,478 per MMBtu, making the headline increase about 43%.
- The Petroleum Ministry clarified that ₹2,110 per MMBtu is the procurement price paid to producers, not the price directly charged to CNG or household PNG consumers.
- The government will provide affordability support of ₹10 per kg of CBG, equivalent to around ₹215 per MMBtu for CBG with 95% methane content.
- After government support, the effective CBG cost to be recovered through the gas pool will be around ₹1,895 per MMBtu.
- This translates into an effective increase of around 28% compared with the prevailing ₹1,478 per MMBtu price.
- CBG will be pooled with other domestically produced natural gas instead of passing its procurement cost directly to consumers.
- The new framework will spread CBG costs across a domestic gas base 2.5 to 3 times larger than before, limiting the impact on individual consumers.
The Ministry of Petroleum and Natural Gas has clarified that the revised pricing framework for Compressed Biogas under the GOBARdhan Scheme will support producers without putting a significant additional burden on CNG and household PNG consumers.
The clarification follows a newspaper report suggesting that the revised CBG price could substantially increase costs for consumers.
Under the existing system, the price paid to CBG producers is linked to 85% of the retail selling price of CNG. Based on the latest revision, this translates to around ₹1,478 per MMBtu. Under the GOBARdhan Scheme, the CBG procurement price has now been fixed at ₹2,110 per MMBtu, representing a headline increase of around 43%.
However, the ministry stressed that this is the procurement price paid to CBG producers and is not directly charged to CNG or domestic PNG consumers.
The government will provide ₹10 per kg of CBG as affordability support, equivalent to approximately ₹215 per MMBtu for CBG containing 95% methane. This support will be funded by the government.
After accounting for this assistance, the effective CBG cost to be recovered through the wider gas consumer base will fall to around ₹1,895 per MMBtu. Compared with the prevailing ₹1,478 per MMBtu level, the effective increase is therefore about 28%, according to the ministry.
The government also pointed out that CBG is not supplied to City Gas Distribution companies at its procurement price. Instead, its cost is pooled with other domestically produced natural gas.
Earlier, CBG costs were spread over the limited APM gas allocation for CNG transport and domestic PNG segments. Under the revised framework, the cost will be distributed across a domestic gas base approximately 2.5 to 3 times larger.
The ministry said this larger pool means the price impact on an individual gas consumer is expected to be negligible. The framework is designed to provide CBG producers with viable and stable prices while protecting consumers from a material increase in gas prices.
