New Delhi: Financial support for marketing organic manure and connecting Compressed Bio Gas (CBG) plants with the city gas distribution grid are among a slew of measures being considered by the Union government to give a fresh fillip to the ‘Gobardhan’ scheme, ThePrint has learnt.
Launched in 2018, the scheme — Galvanising Organic Bio-Agro Resources Dhan — is one of Prime Minister Narendra Modi’s pet projects, aimed at converting organic waste like cattle dung and agri residue to CBG.
CBG has calorific value and other properties similar to Compressed Natural Gas (CNG) and can be utilised as an alternative green renewable automotive fuel. It can replace CNG in automotive, industrial and commercial uses in the coming years and help India reduce its dependence to some extent on imported crude and natural gas.
Though the Gobardhan scheme was launched by the Department of Drinking Water and Sanitation (DDWS) in April 2018, and implemented under the Swachh Bharat Mission Gramin-Phase 2, it had not taken off as expected.
There were implementation gaps. A dozen stakeholder ministries, including those of petroleum, new and renewable energy, agriculture, housing and urban affairs, are involved with the scheme, but most of them were working in silos, two government officials, who did not want to be named, told ThePrint.
The scheme has, however, got a renewed thrust over the last one year or so, with both the Prime Minister’s Office and the cabinet secretary (Rajiv Gauba) monitoring its progress closely.
In the 2023-24 Budget, finance minister Nirmala Sitharaman announced that 500 new “waste-to-wealth” plants would be established under the Gobardhan scheme. These would include 200 CBG plants, including 75 in urban areas, and 300 community or cluster-based plants at a total investment of Rs 10,000 crore.
“Post the Budget announcement, different stakeholder ministries are coming forward to remove bottlenecks and to ensure that projects become viable,” Vini Mahajan, secretary, DDWS, which is piloting the scheme, told ThePrint. “The idea is to reduce India’s crude oil and natural gas imports by producing a substantial quantity of biogas.”
Mahajan said the idea behind Gobardhan is to create an enabling ecosystem to not only encourage entrepreneurs to set up CBG plants but also to make the projects viable.
Currently, 57 CBG plants are running under the Ministry of New and Renewable Energy, 38 under the petroleum ministry’s Sustainable Alternative Towards Affordable Transportation (SATAT) scheme, and 45 under the Ministry of Housing and Urban Affairs, among others.
A whitepaper prepared by the Indian Oil Corporation has estimated India’s CBG potential from various sources at nearly 62 million metric tonnes (MMT) with bio manure generation capacity of 370 MMT.
Proposed incentives
A senior government official from one of the stakeholder ministries told ThePrint that one of the policy interventions being proposed is provision of financial support to manufacturers who are producing organic fertilisers using the bio-slurry being generated by CBG plants.
CBG plants have two by-products — one is gas and the other is bio-slurry. The bio-slurry can be used as manure but currently the market for it is limited, with farmers preferring chemical fertilisers.
“The department of fertilisers is in the process of moving a cabinet note proposing market development assistance for marketing organic manure. This is expected to give a big boost to organic fertiliser manufacturers,” said the senior government official from one of the stakeholder ministries.
A second official aware of the developments said that at a recent meeting to review the Gobardhan scheme, cabinet secretary Rajiv Gauba directed the petroleum ministry to expedite a scheme to connect CBG plants with their city gas distribution network, wherever feasible.
“Currently, CBG is transported through cascades to the network of fuel stations of oil marketing companies (OMCs). It is a tedious, time-consuming process and expensive. Linking CBG to the city’s gas grid to guarantee offtake and seamless connectivity to production units can make the whole project viable. The petroleum ministry has been told to firm up the scheme soon,” the official said.
The petroleum ministry has already issued policy guidelines for co-mingling CBG with natural gas in city gas distribution networks.
Besides, sale of CBG has been initiated from over 100 retail outlets.
Similarly, the urban affairs ministry is working aggressively to set up 75 CBG plants in urban areas. The ministry is working with local urban bodies and municipalities to create an enabling environment to make the projects viable, the second official added.
What all has been done so far
Many of the stakeholder ministries such as petroleum and renewable energy have already introduced several interventions to ensure that CBG plants become commercially viable.
The SATAT scheme launched in 2018 is one such initiative. Under the scheme, OMCs invite ‘Expression of Interest’ from potential CBG manufacturers to set up plants and procure CBG from them for sale at a modest price.
The renewable energy ministry is already providing capital support for CBG plants.
The DDWS is also providing financial assistance of up to Rs 50 lakh per district for the Gobardhan project.
Along with this, loans to entrepreneurs for setting up CBG plants have been included as an activity eligible for priority sector lending under agriculture infrastructure and ancillary activities.
From February 2023, central excise duty exemption has been provided to CNG blended with CBG equivalent to the Goods and Services Tax (GST) paid on biogas/compressed biogas contained in the blended CNG. This has been done to prevent double taxation.
Earlier, CBG was under GST while state Value Added Tax (VAT) and central excise duty were applicable on CNG.
According to these tax provisions, at the time of sale of CBG co-mingled with CNG, it once again attracted VAT and central excise duty on the GST-paid CBG. “This increased the overall selling price of CBG-blended CNG,” the second official explained.
However, challenges remain.
One of the officials quoted earlier said that availability and high purchasing price of feedstock — which goes into the making of CBG — is a big challenge.
“The viability of a plant will increase if the purchase price of feedstock is less. There should not only be availability of feedstock but it should be at close proximity to the CBG plant to make the project viable,” the official said.
According to government officials, developers are also facing difficulties in obtaining finance for CBG projects. There is a high demand for collateral and banks charge higher rates of interest.
CBG is also an evolving field where new technologies are being deployed. “Because of this, the techno commercial evaluation and approval of CBG projects takes time,” said an official.
(Edited by Nida Fatima Siddiqui)
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