In fillip to compressed bio gas, govt allows mixing of manure with urea

Two-pronged boost to returns for entrepreneurs

The Union government has tweaked a key initiative to promote production of compressed bio gas by allowing the bundling of bio manure, a byproduct, with fertilisers such as urea, and is also willing to pay more for the gas, officials told Business Standard.

This will increase returns for entrepreneurs with CBG plants not only by paying them a higher price for their output but also by increasing demand for the byproduct. This is under the Sustainable Alternative Towards Affordable Transport (SATAT) scheme, which, launched four years ago, encourages independent entrepreneurs to set up CBG plants.

The officials said CBG rates under the SATAT scheme had already been raised from Rs 46 per kg to Rs 54 per kg, and that the government was open to a further increase. Given the abundance of biomass in the country, CBG can support the development of an alternative clean fuel for automotive, industrial and other commercial purposes.

The initial target of having 5,000 CBG plants over the next five years has faltered. And, the government is refocusing its approach to the scheme, officials had told Business Standard in October 2022.

 

Subsequently, in December, the Parliamentary Standing Committee on Petroleum and Natural Gas had noted that the scheme was “burdened by lack of clarity, procedural hurdles and has not enthused investors and entrepreneurs to come forward to set up CBG plants.”

 

Case in point, only 35 plants have come up under the SATAT initiative till July 2022, the ministry informed Parliament. Since then, a single plant has gone live in Punjab’s Sangrur with a capacity of 33 tonnes of CBG per day.

 

Work in progress

 

However, officials said a large number of plants are set to go live soon. But the earlier plan of 40 new plants by March 2023 would not be possible.
 

The committee had also recommended that the petroleum ministry should set up a panel to review the letters of intent (LoIs) issued so far and also issue guidelines for fresh LoIs. It had pointed out that as of June 1, 2022, as many as 3,263 LoIs had been issued by oil PSUs such as IOC, HPCL, BPCL, GAIL and IGL.

 

Land has been finalised in 328 cases and only 97 LoIs had achieved financial closure. Officials, however, said no review of the LoIs already issued are planned. “We will instead work on making new LoIs more lucrative for the industry,” an official said. More inter-ministerial talks on the scheme are also planned, he added.

 

SATAT has wide-ranging financial implications, given how the government is incurring Rs 75,000 crore worth of capital expenditure for setting up infrastructure for the city gas distribution network.

 

This network is expected to later carry the CBG produced under SATAT, after being synchronised with CNG.

 

Research institutes working with the government have suggested the need for reinstating the New National Biogas and Organic Manure Programme, which had run till March 2021.

 

Run by the ministry of new and renewable energy, the programme helped producers in setting up biogas plants.

 

Going forward

 

SATAT ensures that oil-marketing companies (OMCs) provide floor prices for the offtake of CBG for the first 10 years through upfront long-term agreements.

 

But the high cost of setting up plants, the low-remuneration model, and other factors have led to low interest.

 

CBG produced at these plants are transported through a cascade of cylinders to the fuel station network of OMCs. It is then marketed as a green transport fuel alternative.

 

But industry insiders said that these prices are too low.

 

Also, the agreements provide them little room to alter the supply based on market conditions, such as seasonal availability of raw materials.

They told the Parliamentary Standing Committee that transportation remains a major difficulty.

 

Officials said the rate for CBG plants under the SATAT scheme has already been raised from Rs 46 per kg to Rs 54 per kg. They stressed that the government plans to further increase the rate paid for the CBG generated.

FEW TAKERS

• Launched in 2018, SATAT aims to incentivise production of compressed biogas (CBG) from various biomass sources
• Initial target of having 5,000 CBG plants over the next five years has faltered
• High cost of setting up plants, low remuneration model, and other factors have led to low interest
• Only 36 plants have come up under the SATAT initiative to date