New Delhi: Indian Biogas Association (IBA) is demanding a fixed rate of Rs 90 per kg for procurement of biogas by oil and gas marketing companies, from the government, citing environmental benefits and to boost the sector.
The IBA will soon put up the suggestion about fixing the procurement price of the biogas, along with other recommendations, for boosting the sector before the newly appointed Union Minister of New and Renewable Energy Minister Pralhad Joshi.
While the retail selling price of compressed biogas (CBG) is aligned with CNG (compressed natural gas), the procurement price is unfortunately linked to the retail selling price (RSP) of CNG, IBA Chairman Gaurav Kedia told PTI.
Consequently, he said with CNG prices in New Delhi hovering at Rs 75-80 per kg, the procurement price of CBG by oil and gas marketing companies falls to Rs 59 per kg (excluding GST).
"This pricing structure fails to recognise the inherent environmental value of CBG. Ideally, CBG should command a premium (of Rs 10-15), reflecting its green credentials. It should be around Rs 90 per kg," he said.
The successful implementation of the SATAT (Sustainable Alternative Towards Affordable Transportation) programme is expected to significantly reduce India's import bill by USD 15 billion, representing roughly 10 per cent.
SATAT is a government initiative to promote CBG as an alternative, green transport fuel.
The current offtake price of CBG is pegged to a discounted retail price of CNG, which is counter-intuitive, considering the critical need to prioritise climate change mitigation, Kedia said.
To incentivise biogas producers and accelerate industry growth, the government needs to establish a more efficient and rational pricing mechanism, he said.
(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)