The revised CBG price under the GOBARdhan Scheme aims to provide a sustainable price for producers while minimizing the impact on consumers through government-funded affordability support and a wider gas pool.
The Press Information Bureau has clarified that a recent article suggesting the revised CBG price under the GOBARdhan Scheme could burden CNG and household PNG consumers presents an incorrect picture. The conclusions are based on select inconsistent assumptions.
Under the existing system, the price paid to CBG producers is linked to 85% of the retail selling price of CNG, approximately ₹1,478 per MMBtu. Under the GOBARdhan Scheme, the CBG price has been fixed at ₹2,110 per MMBtu.
The increase from ₹1,478 to ₹2,110 is approximately 43%. However, it's essential to note that this increased procurement price for CBG producers will not be directly paid by CNG or household PNG consumers. The Government will provide affordability support of approximately ₹215 per MMBtu for CBG with 95% methane content, funded by the Government and not recovered from gas consumers entirely.
Therefore, the effective CBG cost to be recovered through a wide group of gas consumers will be roughly ₹1,900 per MMBtu. It's important to mention that this is a comparison with the prevailing CBG price of ₹1,478 per MMBtu, resulting in an effective increase of approximately ₹422 per MMBtu.
CBG is not sold at its procurement price to Compressed Natural Gas Distribution (CGD) entities. Instead, it's pooled with other domestically produced natural gas, and its cost is spread across the applicable domestic gas pool. Earlier, the cost of CBG was spread only across the limited quantity of APM gas allocated to the CNG (Transport) and PNG (Domestic) segments.
Under the new framework, the net cost of CBG will be spread across a domestic gas base approximately 2.5 to 3 times larger than the earlier base. Due to spreading of CBG cost on a much larger gas pool, the price impact on an individual gas consumer will be negligible.
Source:
Press Information Bureau
