Indian Biogas Association (IBA) wants CBG to be procured at Rs 90/kg by OMCs

The Indian Biogas Association (IBA) is advocating for a fixed procurement rate of Rs 90 per kg for biogas by oil and gas marketing companies in the country. This proposal, which highlights the environmental benefits and aims to boost the sector, will soon be presented to the newly appointed Union Minister of New and Renewable Energy (MNRE), Pralhad Joshi.

Currently, the retail selling price of compressed biogas (CBG) is aligned with compressed natural gas (CNG), but its procurement price is linked to the retail selling price (RSP) of CNG.

According to IBA Chairman Gaurav Kedia, with CNG prices in New Delhi at Rs 75-80 per kg, the procurement price of CBG drops to Rs 59 per kg (excluding GST).

Kedia said that this pricing structure fails to recognise the inherent environmental value of CBG. Ideally, CBG should command a premium of Rs 10-15, reflecting its green credentials. It should be around Rs 90 per kg.

The successful implementation of the SATAT (Sustainable Alternative Towards Affordable Transportation) programme, which promotes CBG as a green transport fuel, could reduce India’s import bill by $15 billion, about 10% of the total. However, the current offtake price of CBG, pegged to a discounted retail price of CNG, is counter-intuitive given the urgent need to prioritise climate change mitigation, Kedia argued.

To incentivise biogas producers and accelerate industry growth, Kedia emphasized the need for the government to establish a more efficient and rational pricing mechanism.

Earlier this year, IBA also advocated for an investment of ₹30,000 crore to procure the necessary machinery and equipment for biomass supply to compressed biogas (CBG) plants, with the aim of reducing LNG imports by 12 MMTA.