The Ministry of Petroleum and Natural Gas has clarified that the revised pricing framework for Compressed Biogas (CBG) under the GOBARdhan scheme is designed to provide greater financial stability to producers while keeping the impact on CNG and household PNG consumers limited.
The government has rejected concerns that the revised CBG procurement price would lead to a significant increase in costs for consumers. Under the new framework, the procurement price for CBG has been fixed at ₹2,110 per MMBtu, compared with the prevailing effective price of around ₹1,478 per MMBtu. The revised rate represents an increase of about 43 per cent at the procurement level, but the ministry said this figure should not be interpreted as a direct increase in CNG or PNG prices.
New Pricing Framework
The revised mechanism aims to provide CBG producers with a more predictable and viable price. The government has also introduced affordability support of ₹10 per kg of CBG, equivalent to approximately ₹215 per MMBtu for CBG containing 95 per cent methane.
After taking this government support into account, the effective CBG cost that needs to be recovered through the gas consumer base is estimated at around ₹1,895 per MMBtu. According to the ministry, this represents an effective increase of roughly 28 per cent over the earlier effective price, rather than the full 43 per cent increase in the headline procurement price.
Why Consumers May See Limited Impact
The Petroleum Ministry has also clarified how the revised CBG cost will be recovered. CBG will not be sold directly to City Gas Distribution companies at the revised procurement price. Instead, it will be pooled with other domestically produced natural gas.
Under the earlier mechanism, the cost of CBG was distributed across a relatively limited pool of gas allocated to the CNG transport and domestic PNG segments. Under the revised framework, the applicable domestic gas pool is expected to be approximately 2.5 to three times larger.
The wider pool means the additional cost will be distributed across a significantly larger volume of domestic gas, reducing the potential impact on individual consumers.
Boost for CBG Producers
The revised pricing mechanism is aimed at addressing concerns over the long-term viability of CBG production. By offering a stable administered price, the government expects producers to have greater revenue visibility and improved confidence to operate and expand their facilities.
The Union Cabinet had earlier approved the national GOBARdhan scheme with an outlay of ₹23,731 crore. The scheme establishes a stable administered CBG price of ₹2,110 per MMBtu and combines government support with a market-based cost-sharing mechanism intended to protect consumers.
Focus on Clean Energy
Compressed Biogas is produced from organic waste and other biomass sources and is intended to contribute to India’s clean-energy transition. The GOBARdhan framework seeks to promote the use of waste as a resource while expanding domestic production of renewable gas.
The government’s approach combines producer support with measures aimed at preventing a substantial increase in the burden on consumers. The ministry said the revised framework has been designed to balance the financial sustainability of CBG plants with consumer affordability.
What It Means for CNG and PNG Users
For consumers, the key distinction is between the CBG procurement price and the retail price of CNG or PNG. The revised ₹2,110 per MMBtu rate is the price paid to CBG producers and is not the price directly charged to households using PNG or motorists using CNG.
With government-funded affordability support and a larger domestic gas pool, the ministry expects the impact on CNG and household PNG consumers to remain limited.
The revised mechanism therefore seeks to strengthen India’s emerging CBG sector without transferring the entire increase in producer procurement costs directly to consumers.
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