Revised CBG pricing to support producers, consumer impact to remain negligible: Petroleum Ministry

New Delhi: The revised pricing framework for Compressed Biogas (CBG) under the GOBARdhan Scheme is aimed at providing a stable price to producers while keeping the impact on CNG and household PNG consumers negligible, the Ministry of Petroleum and Natural Gas said on Saturday.

Ministry was rejecting a newspaper report which suggested that the revised price of Compressed Biogas (CBG) under the GOBARdhan Scheme could place a significant additional burden on CNG and household PNG consumers.

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The ministry said the higher procurement price for CBG would not translate into a similar increase for consumers as the government is providing affordability support and the cost is being spread across a substantially larger domestic gas pool.

Under the existing system, the price paid to CBG producers is linked to 85 per cent of the retail selling price of CNG and currently works out to around Rs 1,478 per one million British thermal units (MMBtu), the ministry said.

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Under the revised GOBARdhan framework, the CBG price has been fixed at Rs 2,110 per MMBtu, an increase of about 43 per cent. However, the ministry clarified that this is the procurement price paid to producers and is not the price directly paid by CNG or household PNG consumers.

The government will provide affordability support of Rs 10 per kg of CBG, equivalent to around Rs 215 per MMBtu for CBG with 95 per cent methane content. After accounting for this support, the effective CBG cost to be recovered through gas consumers would be around Rs 1,895 per MMBtu, or about 28 per cent higher than the prevailing price, it said.

The ministry said the full revised price would therefore not be recovered from consumers. Further, CBG is not sold to city gas distribution entities at its procurement price, but is pooled with other domestically produced natural gas.

Under the new framework, the net cost of CBG will be spread across a domestic gas base 2.5 to 3 times larger than the earlier base. Previously, the cost was spread only across the limited quantity of administered price mechanism (APM) gas allocated to the compressed natural gas (CNG) transport and domestic piped natural gas (PNG) segments.

"CBG producers receive a stable and viable price that enables plants to operate sustainably, while Government-funded affordability support and a substantially wider gas pool protect consumers from any material price impact," the ministry said.

The ministry said the revised framework has been designed to balance the viability of CBG plants with consumer affordability, with the wider gas pool expected to ensure that the impact on individual gas consumers remains negligible.