Impact of Revised CBG Pricing on Consumers Clarified by Government
Recent discussions around the revised pricing of Compressed Biogas (CBG) under the GOBARdhan Scheme have raised concerns about potential increases in costs for CNG and household PNG consumers. However, the government’s response clarifies that consumers will not face the significant financial burden some have suggested.
The price adjustment for CBG producers is indeed notable, moving from ₹1,478 per MMBtu to ₹2,110 per MMBtu, marking a 43% increase. Yet, it’s crucial to differentiate between the procurement price paid to producers and the price consumers might actually face. The full CBG price will not be directly passed on to gas consumers. Instead, the government will provide support worth ₹10 per kg of CBG, equating to ₹215 per MMBtu for CBG that contains 95% methane.
This government-funded support ensures that the effective cost of CBG for consumers will be approximately ₹1,895 per MMBtu, a rise of about 28% compared to the current price of ₹1,478 per MMBtu. The revised pricing strategy aims to strike a balance: while CBG producers gain stability, consumers are shielded from steep price hikes.
Cost Distribution Among Consumers
Additionally, there is an important aspect regarding how CBG prices are managed. Rather than being sold at the procurement price to city gas distribution (CGD) entities, CBG costs will be pooled with other domestic natural gases. Previously, the cost of CBG was divided among a limited supply of APM gas reserved for CNG and PNG segments. The recent structure, however, allows for the distribution of CBG costs across a significantly larger domestic gas base, estimated to be approximately 2.5 to 3 times wider than before.
This broader dispersal means that the impact on individual gas consumers will be minimal. The revised pricing framework has been meticulously crafted, ensuring that while CBG producers receive a fair price that allows for sustainable operation, the affordability measures funded by the government will buffer consumers from any substantial price increases.
The government’s communication serves to reassure consumers that the CBG price revisions, while necessary for sustainability, will not lead to overwhelming financial strain for households relying on CNG and PNG.
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