The Ministry of Petroleum and Natural Gas has addressed concerns regarding a newspaper report suggesting that the revised pricing for Compressed Biogas (CBG) under the GOBARdhan Scheme would place a significant financial burden on Compressed Natural Gas (CNG) and household Piped Natural Gas (PNG) consumers. According to the ministry, the revised framework is designed to provide stable pricing to producers while keeping the consumer impact negligible.
Under the previous system, the price paid to CBG producers was linked to 85 percent of the retail selling price of CNG, operating at approximately ₹1,478 per one million British thermal units (MMBtu). Under the revised GOBARdhan framework, the procurement price has been fixed at ₹2,110 per MMBtu, marking an increase of about 43 percent.
The ministry clarified that this increase represents the procurement price paid to producers rather than the direct cost paid by end consumers. To mitigate potential price hikes, the government is providing affordability support of ₹10 per kg of CBG, which equates to roughly ₹215 per MMBtu for CBG containing 95 percent methane.
After factoring in this government support, the effective CBG cost to be recovered through gas consumers comes to about ₹1,895 per MMBtu. This represents an increase of about 28 percent over the prevailing price, meaning the full revised price will not be passed directly onto the consumer.
Furthermore, CBG is not sold to city gas distribution entities at its raw procurement price. Instead, it is pooled together with other domestically produced natural gas. The net cost of CBG under the new framework will be distributed across a domestic gas base that is 2.5 to 3 times larger than the previous base.
Previously, costs were absorbed only by the limited quantity of administered price mechanism (APM) gas allocated strictly to the CNG transport and domestic PNG segments. By broadening the gas pool and providing government-funded affordability support, the ministry aims to ensure that CBG plants operate sustainably while protecting individual gas consumers from material price increases.
"The revised pricing framework for Compressed Biogas under the GOBARdhan Scheme strikes a necessary balance between producer viability and consumer protection. By utilizing government affordability support and spreading costs across a significantly larger domestic gas pool, the policy ensures that green energy producers receive stable returns without creating inflationary pressures for CNG and PNG consumers. This structural adjustment provides regulatory clarity essential for long-term investments in the domestic biogas sector." — Dr. Shishir Gupta, Founder & CEO, StartupLanes
