New Delhi, August 29: The Ministry of Petroleum and Natural Gas has dismissed concerns regarding the revised purchase price of Compressed Biogas (CBG) under the Gobardhan scheme. Critics feared that this increase would impose a significant financial burden on consumers of Compressed Natural Gas (CNG) and domestic Piped Natural Gas (PNG). The ministry clarified that such assessments are based on inconsistent assumptions and that the actual impact will be quite limited.
According to the ministry, the payment to CBG producers is linked to 85 percent of the retail sale price of CNG. The latest pricing structure sets this price at approximately ₹1,478 per MMBTU.
Under the revised Gobardhan framework, the purchase price for CBG has been set at ₹2,110 per MMBTU, marking an increase of about 43 percent compared to the current price. However, the ministry emphasized that this price is solely the purchase price for producers and is not directly charged to CNG or domestic PNG consumers.
Additionally, the government announced a viability assistance of ₹10 per kilogram to promote CBG. For CBG with 95 percent methane content, this assistance will equate to approximately ₹215 per MMBTU. The government will bear this cost, thereby reducing the additional burden on consumers.
After adjusting for government assistance, the effective CBG cost recovered from gas consumers will be around ₹1,895 per MMBTU. This represents an increase of about 28 percent compared to the current effective cost of ₹1,478 per MMBTU, indicating that the actual increase is significantly lower than the 43 percent rise in the purchase price.
The government further clarified that CBG is not sold directly to City Gas Distribution (CGD) companies at its purchase price. Instead, it is mixed with other domestic natural gas and included in a shared gas pool, distributing costs across the entire domestic gas pool.
The ministry noted that under the previous system, the cost of CBG was distributed only among a limited quantity of gas allocated under the Administered Price Mechanism (APM), primarily used for CNG and domestic PNG consumers in the transport sector.
In the new system, the net cost of CBG will be distributed across a significantly larger domestic gas base, approximately 2.5 to 3 times larger than before. This will substantially reduce the cost impact per consumer.
The government’s revised pricing structure aims to promote CBG production, encourage better utilization of organic waste, and enhance the use of clean energy.
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