Govt rolls out GOBARdhan rules with assured CBG offtake, 10-year price support

New Delhi: The government has operationalised its Rs 23,731-crore GOBARdhan scheme for compressed biogas (CBG), offering producers assured offtake of up to 100 per cent of their output, a government-backed administered price for at least 10 years and capital assistance, in a bid to make waste-to-energy projects more commercially viable and attract private investment.

The Petroleum and Natural Gas Ministry, in operational guidelines dated September 15, has laid down detailed mechanisms for the scheme, which will run from 2026-27 to 2035-36 and seeks to establish a more predictable market for CBG producers.

GOBARdhan stands for Galvanising Organic Bio-Agro Resources Dhan. It is the government's programme to turn organic waste such as cattle dung, agricultural residue, food waste and other biomass into useful products such as biogas, CBG and organic manure. This is to be co-mingled with natural gas for supply to users.


The scheme brings together six components -- assured CBG offtake, a pricing framework, capital assistance, pipeline infrastructure, credit guarantee support and a CBG ecosystem challenge fund, according to the MoPNG guidelines.

The move addresses some of the key hurdles that have constrained the scaling up of India's CBG industry, particularly uncertainty over long-term buyers and project revenues. The government has said the broader scheme is aimed at nearly ten-fold growth in domestic CBG production and greater private investment in the sector.

Under the new framework, eligible CBG producers can opt for assured offtake of up to 100 per cent of CBG available for sale, subject to technical and operational feasibility.

The gas will be mapped either to City Gas Distribution (CGD) entities and geographical areas or to identified CBG clusters for aggregation and injection into trunk pipelines.

City gas distributors will also be required to procure and sell CBG within their overall gas supplies for the CNG transport and domestic PNG segments, according to a phased obligation of 3 per cent in FY2026-27, 4 per cent in FY2027-28 and 5 per cent from FY2028-29 onwards, it said.

The assured-offtake mechanism is intended to address a longstanding problem for CBG developers: having a plant does not by itself guarantee a buyer for the gas.

Under the new rules, firm offtake through the CGD route will be governed by tripartite agreements involving the producer, the CGD entity and GAIL as the designated synchro operator. Trunk-pipeline offtake will also be based only on firm contractual arrangements.

The framework goes beyond a demand mandate by prescribing consequences for non-compliance. If a CGD entity fails to execute a firm offtake agreement within the stipulated period, the ministry may consider measures including rationalisation of its APM/non-APM gas allocation equivalent to the requested CBG quantity.

The government has also introduced an administered CBG price of Rs 2,110 per million British thermal unit, equivalent to about Rs 98 per kg at 95 per cent methane content, excluding taxes and compression charges.

The price will remain in place for a minimum of 10 years, until March 31, 2036, although it can be revised prospectively based on factors including CBG production economics, inflation and other considerations determined by the Project Approval Board.

The government will provide affordability support to the designated synchro operator for 10 years, capped at Rs 10 per kg of CBG procured, to help bridge the difference between the administered procurement price and downstream affordability.

GAIL has been designated as the synchro operator responsible for procurement and pooling of CBG and operation of the CBG-CGD synchronisation mechanism.

For producers, the combination of a defined price and assured demand provides greater revenue visibility when seeking project finance. For CGD companies, however, the framework imposes procurement obligations alongside existing gas-supply requirements.

The guidelines provide capital assistance of up to Rs 30 crore per CBG project across the two eligible capital-support components.

For new greenfield plants, assistance is set at Rs 1.25 crore per tonne per day (TPD) of eligible CBG capacity. Brownfield projects can receive support at 50 per cent of the applicable greenfield rate for additional capacity created through fresh investment. Existing biogas plants upgraded to produce CBG can receive Rs 0.60 crore per TPD, subject to a Rs 5-crore project ceiling.

A separate component will reimburse up to 50 per cent of eligible expenditure on feedstock aggregation and organic-manure value-addition machinery, subject to a ceiling of Rs 0.75 crore per TPD.

The assistance is not an unconditional upfront grant. It is linked to project milestones, including approvals, the first commercial sale of CBG and subsequent plant performance.

The final tranche is linked to plant performance, with the guidelines requiring assessment of production data through SCADA systems and other verification mechanisms. Failure to meet specified performance milestones can result in bank guarantees being encashed.

The new framework marks a transition from the earlier SATAT initiative, under which the government sought to promote CBG production and marketing.

The guidelines state that SATAT, administered by the Petroleum Ministry, will be subsumed from September 1, 2026, with liabilities already committed under the earlier initiative continuing to be honoured. Existing SATAT retail outlets are encouraged to be integrated into the GOBARdhan framework.

The shift is significant because GOBARdhan attempts to bring several elements of the CBG ecosystem under a single framework -- demand, pricing, capital, infrastructure and financing -- rather than relying primarily on individual incentives.

The government is betting that the new scheme will help move CBG from a relatively small waste-to-energy segment into a larger component of India's gas and energy system.

The policy also seeks to monetise agricultural residue, cattle dung and other organic waste while producing both renewable gas and organic manure.