Market

Under SATAT the state oil marketing companies - IndianOil, BPCL and HPCL - buy CBG under long-term agreements and sell it at their retail outlets. CGD companies buy it through GAIL's synchronisation scheme, and industrial users and direct retail are additional routes.

Yes. The original SATAT floor was 46 rupees per kg plus taxes, and under the synchronisation scheme a floor of 770 rupees per MMBTU applies. Pricing is now largely administered or formula-based rather than a single fixed rate, so quote the regime along with the number.

SATAT set a floor of 46 rupees per kg plus taxes in 2018, not to fall below that through 31 March 2029. From June 2025 pricing was linked to 85% of the average CGD CNG price. GOBARdhan (2026) then introduced an administered price of 2,110 rupees per MMBTU, around 105 rupees per kg. Treat evolving figures as sourced scenario inputs, not guarantees.

Since May 2025 the biogas procurement price is calculated as 85% of the average retail selling price of CNG across GAIL's CGD entities, raised from 80%. MoPNG revised the rate from 1,380 to 1,478 rupees per MMBTU excluding GST for 1 June to 31 October 2025 - roughly 72.8 to 77.4 rupees per kg at 95% methane - with the floor remaining 770 rupees per MMBTU.

Alongside its 23,731 crore rupee outlay, the 2026 GOBARdhan scheme sets an administered CBG price of 2,110 rupees per MMBTU and capital assistance of up to 2 crore rupees per TPD. That administered price is a material step up from the 1,478 rupees per MMBTU synchronisation rate and changes project economics accordingly.

No transport charge applies up to 50 km, since it is built into the base price; 1.5 rupees per kg applies for 50-75 km and 2.5 rupees per kg beyond 75 km, paid by the beneficiary CGD entity. Producers also receive a compression charge - 8 rupees per kg to a retail outlet, 2 rupees per kg for pipeline injection.

GAIL is mandated to supply biogas and CBG co-mingled with domestic gas at a uniform base price across all CGD entities, under a tripartite agreement between the producer, GAIL and the CGD entity. This is the mechanism that lets scattered producers sell into the national network at a single reference price.

GAIL buys biogas or CBG from producers and supplies it co-mingled with domestic gas at a uniform base price to CGD entities. The producer signs an agreement with GAIL plus a tripartite agreement with the local CGD entity, and no OMC letter of intent is required.

OMCs sign a long-term commercial agreement - commonly cited as 15 years - and SATAT carries no take-or-pay clause. CBG must be delivered at 250 bar in cascades to the retail outlet, generally within a defined radius, and quality faults trace to whichever party's equipment caused them.

Agreements are long-term - cited variously as five years with extension, or up to 15 years under some structures - with periodic price revision under the synchronisation formula. The minimum procurement price cannot fall below the notified floor.

By cascade - high-pressure cylinder trucks - to retail outlets, or injected into the CGD pipeline where connectivity exists. Pipeline connection lowers logistics cost substantially, but few plants are yet connected, so most sites are trucking.

A developer responds to an OMC Expression of Interest, submits project details, and on selection receives a Letter of Intent, which is then the basis for site finalisation, financing and the commercial agreement. As of July 2025 the SATAT portal recorded 108 commissioned plants against 1,094 active LOIs - a gap worth understanding before assuming an LOI is a plant.

The CBO, approved by the National Biofuels Coordination Committee, requires CGD entities to blend CBG into CNG for transport and PNG for domestic use: 1% in FY2025-26, 3% in FY2026-27, 4% in FY2027-28 and 5% from FY2028-29. It creates demand; it is not itself installed capacity.

In FY2025-26 CBG sales into the CNG transport and PNG domestic segments reached 1.05% against the 1% target, per the Petroleum Minister's written reply of 6 August 2026. But the CBO is an obligation on CGD entities to blend, not proof that enough CBG capacity has been built - India had roughly 217 commissioned plants against a 5,000 target at the same date.

No. Offtake is assured under SATAT and the synchronisation scheme but is not a classic take-or-pay, and because anaerobic digestion cannot be ramped on and off, mismatch risk sits partly with the producer. Financiers therefore weigh feedstock and O&M capability alongside the offtake contract rather than treating the contract as sufficient.

Reliance laid the foundation on 2 April 2025 for the first of a planned 500 plants - Kanigiri in Andhra Pradesh, 475 acres, 139 crore rupees, 100 TPD - within a 65,000 crore rupee state programme. Adani Total Gas runs Barsana at 600 TPD feedstock; GPS Renewables builds EPC at scale with IOC and BPCL joint ventures; EverEnviro operates an Indore MSW plant of about 15 TPD. Most of the large figures are planned capacity, not operational.

The Kalaburagi-Vijayapura geographical area is served by AG&P Pratham / THINK Gas, holding 25-year PNGRB authorisation across several southern states. Kalaburagi has no trunk gas pipeline, so CBG there is cascade and retail oriented rather than injection oriented.

Industrial users buy CBG or biomethane to displace LPG, furnace oil or coal for process heat, priced against rupees-per-MMBTU parity with those fuels. In districts with coal, FO or LPG-based industry and no pipeline, that thermal demand can be the most direct offtake route available.

Yes, and many prefer to - it captures more value and avoids the losses and taxation friction of pipeline injection. Multiple stakeholders report that on-ground synchronisation remains limited, so direct sales still dominate in practice.

It converts voluntary demand into a legal obligation on CGD entities, which improves offtake certainty - but the volumes are consumption-linked targets, not a guarantee that supply exists. Petroleum Minister Hardeep Singh Puri stated the CBO would encourage investment of around 37,500 crore rupees and facilitate 750 CBG projects by 2028-29, which is a projection rather than a commitment.

Anchor the forecast to the local CGD entity's actual CNG and PNG volume times the CBO percentage, plus any industrial thermal demand nearby - not to national totals. As an illustration, a 10 TPD plant over 330 days at the administered price implies roughly 33 crore rupees of annual CBG revenue.

It can be, with commonly cited returns of roughly 14-20% IRR and a 4-6 year payback - but only where feedstock is secured cheaply, uptime reaches 85-90% and the digestate is monetised. Assured OMC offtake removes market risk; it does not remove execution risk, and the returns are execution-dependent.

Promoter equity plus bank and NBFC debt - Bank of Baroda has a CBG line for plants of 2 TPD and above, and NABARD refinances rural projects - alongside MNRE capital subsidy and state incentives. CBG carries RBI Priority Sector Lending status, and GOBARdhan (2026) adds a credit guarantee covering up to 85% of eligible MSME loans.

Illustratively: feedstock pre-processing about 1.5 crore rupees, digester about 5 crore, upgrading about 4.5 crore, compression and cascade about 3 crore, civil and utilities about 2 crore, instrumentation and SCADA about 1 crore - totalling roughly 20-30 crore. Upgrading plus compression alone is 20-25% of capex.

Commonly around 50-60% debt and 20-30% equity with the balance from subsidy, where Central Financial Assistance of up to 10 crore rupees and state subsidies of 1-3 crore reduce both the equity and the debt requirement. Documentation quality is what drives when the subsidy actually arrives.

Feedstock cost and availability, plant utilisation, methane recovery and slip, the CBG price, and FOM realisation. Feedstock is usually the largest single cost and the biggest swing factor, and small changes in utilisation move IRR more than most equipment choices do.

Advisory sources cite roughly 14-22% post-tax IRR and DSCR around 1.4-1.7x for a typical 5-10 TPD biomass plant, but returns vary sharply by feedstock: paddy straw around 7-12%, Napier, press mud and poultry 12-20%, spent wash and maize reaching 20-30%. The feedstock decision is the return decision.

For a 20 TPD plant, indicative project cost was about 11 crore rupees on press mud, poultry or dung; about 12 crore on Napier; about 14 crore on paddy straw; and about 28 crore on segregated MSW. Handling-heavy feedstocks cost more to build for as well as more to run.

CFA and state subsidies are disbursed against milestones and complete documentation, so a paperwork or verification delay stretches payback and strains working capital at exactly the wrong moment. Incomplete applications are the most commonly cited cause of delay.

CBG - up to 2,110 rupees per MMBTU administered under GOBARdhan, against 1,478 under the synchronisation scheme - plus FOM, LFOM and PROM with 1,500 rupees per tonne of MDA behind them, plus optional biogenic CO2 and contingent carbon. Costs are dominated by feedstock and parasitic power. A defensible model treats CBG plus FOM as the core and CO2 and carbon as upside.

Land for the plant and for any energy-crop cultivation is leased, never owned, and farmer producer organisations or cooperatives can aggregate feedstock and share revenue. These structures spread feedstock risk and align farmer incentives with the plant's uptime rather than against it.

Projects can use accelerated depreciation and input GST credits, and Budget 2026-27 exempted central excise on the CBG portion of blended CNG, improving CGD willingness to pay the full rate. MSME status can unlock further benefits. Exact rates should be confirmed with a tax adviser rather than taken from a summary.

Realistic, location-specific feedstock data and contracts; conservative yield and recovery assumptions; a full approvals map; sensitivity analysis; and vendor performance guarantees. Lenders discount optimistic Napier yields and overstated utilisation, so a DPR built on brochure figures is discounted before it is read.

Per Business Standard (2 April 2025), Reliance New Energy's first CBG plant at Kanigiri, Andhra Pradesh - 100 tonnes, 475 acres, Napier-based - is being established with an investment of 139 crore rupees, and is the first of a planned 500 plants totalling 65,000 crore. It is a captive-feedstock, large-integrated model, not a template for a standalone 5 TPD plant.

Retail-outlet versus pipeline-injection offtake; captive versus aggregated feedstock; and whether digestate and CO2 are monetised at all. Small retail-model plants can cost roughly double the pipeline-injection model for the same capacity, so the offtake decision is a capex decision too.

Recent deals show structured debt - an 836 crore rupee facility for nine plants under the IOC-GPS Renewables joint venture - and mezzanine funding of 50 crore from an asset manager, alongside green bonds, blended finance and viability-gap-style support. The capital base is widening beyond plain bank debt.

Large players - Reliance, Adani Total Gas, GPS Renewables, EverEnviro, and IOC and IGL joint ventures - are building multi-plant portfolios, which favours standardised replicable designs and creates eventual consolidation potential. Portfolio counts are planned rather than operational, so read them as pipeline, not fleet.

Feedstock is often paid for well ahead of CBG and FOM receipts, and subsidy timing is uncertain, so undersized working capital distresses otherwise viable plants. On the contract side, insist on guaranteed methane recovery, guaranteed specific power consumption and a guaranteed outlet specification, each with a test protocol and a penalty attached.