Centre Dismisses Concerns Over Revised CBG Price Impact

The Centre has dismissed concerns that the revised price of Compressed Biogas (CBG) under the GOBARdhan Scheme could significantly increase costs for CNG and household piped natural gas (PNG) consumers.

The Ministry of Petroleum and Natural Gas said the current pricing mechanism links the price paid to CBG producers to 85 per cent of the retail selling price of CNG, which is around Rs 1,478 per MMBtu. Under the revised GOBARdhan framework, the government has fixed CBG procurement price at Rs 2,110 per MMBtu, a 43 per cent increase from the prevailing price.

However, this procurement price is paid to CBG producers and is not directly paid by CNG or household PNG consumers. The Centre will provide affordability support of Rs 10 per kg of CBG, equivalent to approximately Rs 215 per MMBtu for CBG containing 95 per cent methane, which would reduce the amount that needs to be recovered through gas consumers.

After factoring in the government support, the effective CBG cost to be recovered through the gas consumer base would be around Rs 1,895 per MMBtu, compared with the prevailing effective price of Rs 1,478 per MMBtu. This represents an effective price increase of around 28 per cent, significantly lower than the headline increase in the procurement price.