 "RIL to invest Rs 65,000 crore in 500 CBG plants in Andhra Pradesh")
Mukesh Ambani-promoted Reliance Industries (RIL) on Tuesday signed a memorandum of understanding (MoU) to invest Rs 65,000 crore in setting up of 500 compressed biogas (CBG) plants in Andhra Pradesh (AP).
“Today, the GoAP has signed a landmark MoU with Reliance Industries, securing a ₹65,000 cr investment for Compressed Bio Gas (CBG) projects. This partnership is set to generate 2.5 lakh employment opportunities in our State. Out of Reliance’s national target of 2,000 CBG plants, 500 state-of-the-art CBG plants will be built throughout Andhra Pradesh over the next three years. This will make our state a frontrunner in clean energy and sustainable development. With Reliance's commitment to enhancing lives and livelihoods in AP, this partnership will also drive growth across multiple sectors. By attracting such transformative investments, our Integrated Clean Energy Policy is proving instrumental in positioning our State as a preferred destination for industries — a swing in AP’s favour,” Chief Minister Chandrababu Naidu said in a tweet.
AP’s Minister for Education, Information Technology and Electronics Nara Lokesh said the foundation for this maiden biofuel project in the State will be laid on December 28 at Kanigiri in Prakasam district.
The MoU was signed by representatives of RIL and senior officers of the State government at the Secretariat in the presence of Naidu.
This is by far RIL’s biggest investment announcement for the CBG segment. To put the 500 CBG plants number into perspective, there are only 109 functional CBG/Bio CNG plants in India, according to GOBARdhan (Galvanising Organic Bio-Agro Resources Dhan) data.
In its FY24 annual report, RIL said it has launched the first commercial-scale CBG plant in Barabanki, Uttar Pradesh (UP), and plans to expand to 25 CBG plants across India, with a goal for 100 CBG plants in the next five years.
UP is also the chosen-ground for RIL’s only other competitor in the CBG segment, Gautam Adani-promoted Adani Total Gas, which has so far supplied 208 tonnes of CBG to GAIL from its Barsana unit in the State.
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CBG can be blended as a cleaner fuel with other fossil-based gases such as compressed natural gas (CNG), the primary driver of the recent rise in investments in this space. Industry estimates put India’s current Bio-CNG potential at 32 million tonnes.
Gaurav Kedia, chairman for Indian Biogas Association, noted that ballpark CBG is 20 per cent cheaper to procure compared to fossil-based gas CNG. However, he added: “The 20 per cent margin is absorbed at the oil marketing company (OMC) level, so anyone producing and selling CBG to OMCs will need to negotiate their own margins.”
On the profile of off-takers for such a production, Kedia said: “Retail outlets that sale to OMCs or other users of natural gas are the likely off-takers for CBG production. In addition to off-take, a large-scale investment will trickle down the benefits to engineering, farming, and pipeline infra companies that will help set up these CBG units."
According to people in the know, with its CBG produce, RIL may cater to a mix of segments, including captive and commercial use. Further, RIL has also started retailing CBG through its own outlets. As of September, through Reliance BP Mobility Limited (RBML), RIL had expanded its CBG network to 28 sites retailing Bio-CNG, according to its October earnings press statement.