India Revises CBG Pricing Framework to Balance Producer Viability and Consumer Affordability

The Indian Ministry of Petroleum and Natural Gas has revised the pricing framework for Compressed Biogas (CBG) under the GOBARdhan Scheme. The move aims to provide a stable price to producers while minimizing the impact on CNG and household PNG consumers.

Under the existing system, CBG producers are paid 85% of the retail selling price of CNG, currently around Rs 1,478 per one million British thermal units (MMBtu). The revised framework fixes the procurement price at Rs 2,110 per MMBtu, a 43% increase. However, the ministry clarifies that this is not the price directly paid by 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% 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% higher than the prevailing price.

The ministry says that the full revised price will not be recovered from consumers, as the net cost of CBG will be spread across a domestic gas base 2.5 to 3 times larger than the earlier base.