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Government Funds CBG Price Hike, Consumers Unaffected
30 Aug
Summary
- Government to fund affordability support for compressed biogas producers.
- Revised CBG procurement price increases by 43% to Rs 2,110 per MMBtu.
- Wider gas pool spreads cost, minimizing impact on individual consumers.
The Ministry of Petroleum and Natural Gas has announced a revised pricing framework for compressed biogas (CBG) under the GOBARdhan scheme, designed to support producers without substantially impacting consumers. The new procurement price for CBG producers has been fixed at Rs 2,110 per MMBtu, a 43% increase from the previous Rs 1,478 per MMBtu. This revision aims to ensure the sustainable operation of CBG plants.
To buffer consumers from this increase, the government will provide direct affordability support, equivalent to Rs 215 per MMBtu. This measure means the effective cost recovered from consumers will be approximately Rs 1,895 per MMBtu, representing a roughly 28% increase over the prior effective price. This strategy ensures producers are compensated while protecting consumers.
Furthermore, the cost of CBG will be spread across a significantly larger domestic gas pool, rather than being limited to specific segments. This wider base, estimated to be 2.5 to 3 times larger than before, dilutes the price impact on individual gas consumers, making it negligible. The framework balances producer viability with consumer affordability.
