Hard-to-achieve govt CBG pledge for 5% mix

Vol 26, PW 11 (18 May 23) Midstream, Downstream, Renewables

Obstacles in the path of Compressed Bio-Gas (CBG) production reveal a harsh reality at odds with Nirmala Sitharaman's well-meaning pledge to ensure that all marketed gas contains a minimum of 5% of CBG.

But it might take five to ten years before there are enough CBG plants for the finance minister's February 1 (2023) budget proclamation that "a 5% CBG (blending) mandate will be introduced for all organisations marketing natural gas and biogas" to bear fruit. Sitharaman announced an investment of Rs10,000cr ($1.22bn) to set up 200 CBG plants and another 300 community and cluster-based biogas plants but, revealingly, offered no timeframe.

Hardly surprising when you recall the failure to meet a bold target to set up 5000 new CBG plants by March 31 (2023), announced by ex-oil minister Dharmendra Pradhan on October 1 (2018). Pradhan said the Sustainable Alternative Towards Affordable Transportation (SATAT) scheme would produce 15m t/y of CBG, working out to 40,000 t/d of production with an average plant size of 8 t/d capacity.

But SATAT's own figures tell a different story. By March 31 (2023), only 46 new CBG plants (less than 1%) of the target had been set up, with just 16,164 tonnes of CBG produced and sold.

Worse, by March 31 (2023), the government had issued 4090 Letters of Intent (LoIs) to enterprises interested in setting up CBG plants. But little has moved.

CBG entrepreneurs complain they are not even offered the minimum government-mandated price of Rs46/kg ($0.56) for their supplies. "They (gas marketing companies) offer us a price of only Rs38/kg ($0.46)," we hear.

Also expensive is transporting CBG in cylinders by truck. Still unclear is who will bear these costs: the producers or the gas marketers? "For companies that produce CBG, the main problem is that GAIL, IndianOil, HPCL or BPCL do not guarantee 100% offtake from day one," a CBG entrepreneur tells this report.

"They tell us it would take 18 to 24 months to offtake the plant's full capacity and blame red tape." He explains CBG cannot be stored like conventional gas because of its composition and must be flared if not taken immediately, resulting in losses.