Govt Dismisses CBG Price Hike Concerns

The government has dismissed concerns that the higher procurement prices for Compressed Biogas (CBG) under the GOBARdhan Scheme could sharply increase costs for CNG and household PNG consumers.

The Ministry of Petroleum and Natural Gas said that calculations suggesting a substantial burden on consumers were based on inconsistent assumptions. It stressed that the revised CBG procurement rate should not be treated as the price directly payable by consumers.

Under the existing mechanism, the price paid to CBG producers is linked to 85 per cent of the retail selling price of CNG, which currently translates into a procurement price of around ₹1,478 per MMBtu. The revised GOBARdhan framework fixes the CBG procurement price at ₹2,110 per MMBtu, representing an increase of about 43 per cent.

However, the ministry said this increase does not translate into an equivalent rise in CNG or domestic PNG prices. The Centre will provide affordability support of ₹10 per kg of CBG, equivalent to roughly ₹215 per MMBtu for gas containing 95 per cent methane.

After accounting for this support, the effective CBG cost recoverable from the gas consumer base would be around ₹1,895 per MMBtu, compared with ₹1,478 per MMBtu currently. This means the effective increase works out to approximately 28 per cent rather than the headline 43 per cent rise.

The ministry also clarified that CBG is not directly supplied to City Gas Distribution companies at its procurement price. Instead, CBG is pooled with other domestically produced natural gas, allowing its cost to be distributed across the domestic gas pool.

Previously, CBG costs were spread over the limited Administered Price Mechanism gas allocated to transport CNG and domestic PNG. Under the revised framework, the cost will be distributed across a domestic gas base around 2.5 to three times larger, significantly diluting the impact on individual consumers.

The government's clarification on the CBG price hike is expected to provide relief to CNG and PNG consumers, who were concerned about the potential increase in their gas bills. The move is also expected to promote the use of CBG, which is a cleaner and more environmentally friendly alternative to traditional fossil fuels.

In the context of India's energy landscape, the promotion of CBG is a significant step towards reducing the country's dependence on imported fossil fuels and promoting the use of renewable energy sources. The GOBARdhan Scheme, which aims to promote the production and use of CBG, is a key initiative in this regard.

Overall, the government's decision to revise the CBG procurement price and provide affordability support is expected to have a positive impact on the energy sector and the environment. It is also expected to provide relief to consumers, who were concerned about the potential increase in their gas bills.

The impact of the revised CBG procurement price on CNG and PNG consumers is expected to be minimal, thanks to the government's affordability support and the pooling of CBG with other domestically produced natural gas. This move is expected to promote the use of CBG and reduce the country's dependence on imported fossil fuels.

In conclusion, the government's clarification on the CBG price hike is a significant development in the energy sector. It is expected to provide relief to consumers, promote the use of CBG, and reduce the country's dependence on imported fossil fuels. The move is also expected to have a positive impact on the environment, as CBG is a cleaner and more environmentally friendly alternative to traditional fossil fuels.