India has unveiled a new pricing structure for Compressed Biogas (CBG) aimed at bolstering the bioenergy sector while minimizing the financial impact on gas consumers. Under the National Circular Bioenergy Scheme, known as GOBARdhan, the procurement price for CBG is set at ₹2,110 per MMBtu, approximately ₹105 per kilogram.
The government will offer affordability support of ₹10 per kilogram, effectively reducing the cost burden on the domestic gas market. This initiative is part of a broader strategy to convert agricultural residue, cattle dung, and other biodegradable materials into renewable gas. The Ministry of Petroleum and Natural Gas clarified on August 29 that the new pricing would not significantly increase CNG and domestic PNG prices.
Previously, CBG producers received payments linked to 85% of the retail CNG price, which amounted to roughly ₹1,478 per MMBtu. The new price represents a 43% increase at the procurement level. However, with government support, the effective cost to consumers will be about ₹1,895 per MMBtu, marking a 28% increase rather than 43%.
CBG will be pooled with other domestic natural gas, spreading costs over a larger base estimated to be 2.5 to three times the previous pool size. This wider base, along with government support, aims to make the impact on individual consumers negligible. The framework seeks to provide a stable price for producers while preventing significant increases in household and transport fuel bills.
Long-term price stability has been a challenge for India's CBG industry, which requires substantial investment and certainty in demand and pricing. The new administered price of ₹2,110 per MMBtu is designed to address this, offering a ten-year horizon for project developers and enhancing investment prospects.
Part of the ₹23,731-Crore GOBARdhan Scheme
The revised pricing is a component of the ₹23,731-crore GOBARdhan National Circular Bioenergy Scheme. The program aims to increase India's CBG production nearly tenfold. It integrates pricing, assured offtake, financing, and infrastructure under a unified framework.
More than 200 CBG plants were operational when the program was announced. GOBARdhan establishes an assured offtake framework linked to India's CBG blending trajectory. City Gas Distribution companies will procure increasing CBG quantities as the renewable-gas component of CNG and PNG rises. The CBG obligation is set at 3% in FY2026-27, 4% in FY2027-28, and 5% from FY2028-29 onwards.
This framework provides a long-term demand signal alongside the new price, enhancing project bankability. The government also addresses high initial capital costs for CBG facilities, offering up to ₹2 crore in capital assistance per tonne per day of installed capacity. This support extends to the value chain, including feedstock aggregation and organic manure processing.
Transportation challenges are also addressed, with support for pipelines connecting CBG plants to gas distribution networks. This integration allows renewable gas from rural areas to enter the wider network, reducing reliance on road transport and expanding market access.
