Sub-headline: CBG procurement price has been fixed at ₹2,110 per MMBtu under the revised GOBARdhan framework. Government support and a wider domestic gas pool are expected to cushion the impact on consumers.
Highlights:
- CBG procurement price fixed at ₹2,110 per MMBtu
- Earlier linked price stood at around ₹1,478 per MMBtu
- Revised procurement price is about 43% higher
- Government to provide ₹10/kg affordability support
- Effective CBG cost estimated at ₹1,895 per MMBtu
- Wider domestic gas pool may dilute consumer impact
The revised pricing framework for Compressed Biogas (CBG) under the GOBARdhan Scheme is expected to improve returns and provide greater price stability to producers, while keeping the impact on CNG and household PNG consumers limited.
Under the existing pricing mechanism, the amount paid to CBG producers is linked to 85% of the retail selling price of CNG. Based on the latest revision, this translates to approximately ₹1,478 per MMBtu.
Under the revised GOBARdhan framework, the procurement price of CBG has been fixed at ₹2,110 per MMBtu. This represents an increase of around 43% compared with the earlier level.
However, the higher procurement price does not translate directly into a similar increase for CNG and household PNG consumers.
The government will provide affordability support of ₹10 per kg of CBG. For CBG containing 95% methane, this is equivalent to approximately ₹215 per MMBtu.
After adjusting for this government support, the effective CBG cost to be recovered from the gas consumer base is estimated at around ₹1,895 per MMBtu. Compared with the previous ₹1,478 per MMBtu, the effective increase works out to approximately 28%.
The actual impact on individual consumers is expected to be considerably lower because CBG is pooled with other domestically produced natural gas instead of being supplied to City Gas Distribution companies at its standalone procurement price.
Earlier, the CBG cost was distributed across the relatively limited APM gas allocation available for CNG used in transport and PNG supplied to households. Under the revised mechanism, the net CBG cost will be spread over a domestic gas pool estimated to be around 2.5 to three times larger than the previous base.
This wider pool is expected to dilute the impact of higher CBG procurement costs on individual CNG and PNG consumers.
Overall, the revised framework aims to strike a balance between providing CBG producers with more stable and attractive pricing and protecting consumers through government affordability support and a broader cost-sharing mechanism.
