India's GOBARdhan Scheme Price Hike Impact on CNG and PNG Consumers Minimal

The Indian government has rejected concerns over a price hike for Compressed Biogas (CBG) under the GOBARdhan Scheme, stating that its impact on CNG and PNG consumers will be negligible.

The Ministry of Petroleum and Natural Gas claimed that the existing pricing mechanism links the CBG procurement price to 85 per cent of the retail selling price of CNG. According to this link, the current CBG procurement price is around Rs 1,478 per MMBtu.

However, under the revised GOBARdhan framework, the CBG procurement price has been fixed at Rs 2,110 per MMBtu, representing a 43 per cent increase over the prevailing price. The government claims that this increased cost will be offset by an affordability support of Rs 10 per kg of CBG, equivalent to approximately Rs 215 per MMBtu for CBG containing 95 per cent methane.

After accounting for the government support, the effective CBG cost to be recovered through gas consumers would be around Rs 1,895 per MMBtu, compared with the prevailing effective price of Rs 1,478 per MMBtu. This translates into an effective increase of approximately 28 per cent.

The Ministry further clarified that CBG is pooled with other domestically produced natural gas, and its cost distributed across the applicable domestic gas pool. The new framework distributes the net cost of CBG across a larger domestic gas base, which is roughly 2.5 to three times larger than the earlier base.