Govt Dismisses CBG Price Hike Concerns, Says CNG, PNG Impact Minimal

New Delhi: The government has dismissed concerns that 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 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.

CBG Procurement Price Revised

Under the existing mechanism, the price paid to CBG producers is linked to 85 per cent of the retail selling price of CNG. This 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.

Government Support To Lower Cost

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.

Wider Gas Pool To Absorb Impact

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.