GAIL looks to establish 26 bio-CNG plants; floats EoI for joint venture

Indian public sector firm GAIL (India) Ltd. is planning to establish as many as 26 bio-CNG plants in the country over the next two to three years. These plants will be set up either by GAIL alone or through joint ventures with raw material suppliers or biogas producers.

To facilitate this, GAIL has issued an Expression of Interest (EoI) across India, inviting companies that meet specific criteria to form joint ventures for sourcing raw materials like paddy straw, municipal solid waste, and sugarcane press mud.

This has come after GAIL and TruAlt Bioenergy announced in January this year to jointly establish 10 compressed biogas (CBG) plants in India through a joint venture named Leafinti Bioenergy Limited involving a $72-million investment.

Now GAIL has issued Letters of Intent to gas producers and has entered into agreements with major biogas producers such as Adani and Reliance Industries Ltd. to purchase their entire biogas output at a premium price of $15-$16 per million metric British thermal unit (mmBtu), according to Praveer Kumar Agarwal, the executive director of GAIL.

The company mitigates these costs by mixing the biogas with pooled gas, reducing the selling price to less than half, a strategy that has proven popular among biogas producers across India.

As per reports, GAIL, along with its joint venture partners, is expected to invest up to Rs 1,300 crore, including equity contributions of 30%. Each plant, with capacities ranging from 5 to 10 tonnes per day, will cost between Rs 30 crore to Rs 50 crore. This initiative will require an investment of Rs 1,300 crore over the next two to three years.

Recently, the Punjab Energy Development Agency (PEDA) has entered into an agreement with GAIL (India) Limited to establish 10 compressed biogas projects and other ventures related to new and renewable energy in the region.

The Green Hydrogen Stint

Additionally, GAIL is setting up two 10 MW green hydrogen pilot projects in Vaijaipur, Madhya Pradesh, with a capacity of 4,300 kg. The PSU expects at least one plant to be commissioned next month. However, the commercial production of green hydrogen remains costly at Rs 500-600 per kg, compared to grey hydrogen at Rs 150-200 per kg.

Agarwal also mentioned that GAIL has recently signed a contract with Avantika Gas in Indore to blend 5% green hydrogen with LNG for the first time, selling the gas at $10-12/mmBtu.