The Indian Biogas Association (IBA) is calling for a fixed rate of Rs 90 per kg for procurement of biogas by oil and gas marketing companies, from the government - citing environmental benefits, and a boost to the sector as reasons.
The IBA will suggest other recommendations for enhancing the sector, before the newly appointed Union Minister of New and Renewable Energy Minister Pralhad Joshi.
While the retail selling price of compressed biogas (CBG) is aligned with CNG (compressed natural gas), the procurement price is linked to the retail selling price (RSP) of CNG, according to IBA chairman Gaurav Kedia.
He added that, with CNG prices in New Delhi averaging at between Rs 75-80 per kg, the procurement price of CBG by oil and gas marketing companies falls to Rs 59 per kg (excluding GST).
"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," he said.
The successful implementation of the SATAT (Sustainable Alternative Towards Affordable Transportation) programme is expected to significantly reduce India's import bill by $15 billion, representing roughly 10%.
The current offtake price of CBG is pegged to a discounted retail price of CNG, which is counter-intuitive, considering the critical need to prioritise climate change mitigation, Kedia said.
To incentivise biogas producers and accelerate industry growth, the government needs to establish a more efficient and rational pricing mechanism, he said.
Indian Biogas Association calls for fixed rate for CBG procurement
