Centre sticking to target of 5,000 compressed biogas plants by FY25

Announced in 2018, SATAT scheme has been able to establish only 46 CBG plants until now

The launch of 200 small-scale compressed biogas (CBG) projects, state-led growth, and higher commercial sale rates, along with a host of separate policy measures, can still boost a key central scheme to push up CBG production in India, the government believes.

Top officials from the Ministry of Petroleum and Natural Gas (MoPNG) recently told industry stakeholders at a meeting in Delhi that it will not scale back the target of setting up 5,000 commercial CBG plants by 2024-25 under the Sustainable Alternative Towards Affordable Transport (SATAT) scheme.

Launched in 2018, SATAT aims at incentivising the production of CBG from various biomass sources. But the scheme has lagged behind targets, with the country only being able to establish 46 CBG plants so far. This may change soon, said officials.

Officials told the Global Conference on CBG last week that CBG sales have started from more than 100 retail outlets nationwide. The government will also discuss effective offtake guarantees on CBG and bio-manure, as well as low-cost financing, fiscal incentives, and a carbon accounting system, they said.

States are also expected to take the lead in finalising projects from now on, they said. Case in point, the Union Territory administration in Ladakh has unveiled plans for setting up 200 CBG plants and 300 community and cluster-based biogas plants.

Work in progress

Officials expressed hope that a large number of plants are set to go live soon, given that long-term commercial agreement for the procurement of CBG by oil and gas marketing companies.

MoPNG has issued policy guidelines for commingling of CBG with natural gas in city gas distribution (CGD) networks, while the Reserve Bank of India has included CBG projects under priority sector lending, they told Business Standard.

“We are working to facilitate the setting up of as many as 200 CBG projects under the umbrella of the GOBARdhan (Galvanizing Organic Bio-Agro Resources dhan) scheme. An announcement will be made soon,” an official said.

Launched in 2018, the GOBARdhan scheme aims at managing and converting cattle dung and solid waste in farms into compost, biogas, and bio-compressed natural gas (CNG). 

Also, the Central Pollution Control Board has included CBG plants under its ‘white category’ status, clubbing them with other industries which are practically non-polluting, the official added. This excuses plants from seeking green clearances.

Commercial CBG procurement prices may also be raised soon, officials hinted. A primary request of the producer industry, minimum procurement prices for the gas were last raised in June 2022 to Rs 54 per kilogram.

Slow, not steady

The government is refocusing its approach to the scheme, officials had told Business Standard in October 2022. Subsequently, in December, the parliamentary standing committee on piped natural gas noted that the scheme was “burdened by lack of clarity, procedural hurdles, and has not enthused investors and entrepreneurs to come forward to set up CBG plants”.

The committee had also recommended that the petroleum ministry should set up a panel to review the letters of intent (LoIs) issued so far and also issue guidelines for fresh LoIs. It had pointed out that as of June 1, 2022, as many as 3,263 LoIs had been issued by oil public sector undertakings, such as IndianOil, Hindustan Petroleum Corporation, Bharat Petroleum Corporation, GAIL (India), and Indraprastha Gas.

The land has been finalised in 328 cases and only 97 LoIs had achieved financial closure, it had said. Officials said they are working to make new LoIs more lucrative for the industry.

SATAT has wide-ranging financial implications, given how the government is incurring Rs 75,000 crore worth of capital expenditure for setting up infrastructure for the CGD network. This network is expected to later carry the CBG produced under SATAT, after being synchronised with CNG. 

Research institutes working with the government have suggested the need for reinstating the New National Biogas and Organic Manure Programme, which had run until March 2021. Run by the Ministry of New and Renewable Energy, the programme helped producers in setting up biogas plants.

The big CBG push

Minimum procurement prices to be raised further

Low-cost financing and other fiscal incentives being planned

More letters of intent to be issued by OMCs for purchase 

RBI allows priority sector lending in the sector

Excused from seeking green clearances by CPCB

n Commingling with CNG by city gas companies permitted