New Delhi: ThePrint has learned that marketing of organic manure and financial assistance for connecting Compressed Bio Gas (CBG) plants to the city gas distribution grid are among the measures being considered by the central government to give a fresh impetus to the ‘Govardhan’ scheme. There is one.
Launched in 2018, the scheme – Galvanizing Organic Bio-Agro Resources Dhan – is one of the pet projects of Prime Minister Narendra Modi, which aims to convert organic waste like cattle dung and agricultural residues into CBG.
CBG has the same calorific value and other properties as Compressed Natural Gas (CNG) and can be used as an alternative green renewable automotive fuel. It could replace CNG in automotive, industrial and commercial uses in the coming years and help India reduce its dependence on imported crude and natural gas to some extent.
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 did not take off as expected.
There were implementation gaps. A dozen stakeholder ministries, including petroleum, new and renewable energy, agriculture, housing and urban affairs, are involved in the scheme, but most of them were operating in silos, two government officials, who did not wish to be named, told ThePrint.
However, the scheme has received a renewed push over the past year, with both the Prime Minister’s Office and the Cabinet Secretary (Rajiv Gauba) closely monitoring its progress.
In the 2023–24 budget, Finance Minister Nirmala Sitharaman announced that 500 new “waste to wealth” plants would be set up under the Govardhan scheme. These will 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.
“After the budget announcement, various stakeholder ministries are coming forward to remove bottlenecks and make projects viable,” Vini Mahajan, secretary, DDWS, which is piloting the scheme, told ThePrint. “The idea is to reduce India’s import of crude oil and natural gas by producing significant amount of biogas.”
Mahajan said the idea behind Govardhan is to create an enabling ecosystem not only to 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 Sustainable Alternative Towards Affordable Transportation (SATAT) scheme of the Ministry of Petroleum, and 45 under the Ministry of Housing and Urban Affairs.
A white paper India’s CBG capacity from various sources is estimated to be around 62 million metric tonnes (MMT) in an estimate prepared by the Indian Oil Corporation, with a bio-fertilizer production capacity of 370 MMT.
proposed incentive
A senior government official from one of the stakeholder ministries told ThePrint that one of the proposed policy interventions is the provision of financial assistance to manufacturers who are producing organic fertilizers using the bio-slurry generated by CBG plants.
CBG plants have two by-products – one is gas and the other is bio-slurry. Bio-slurry can be used as manure but currently its market is limited, farmers are preferring chemical fertilizers.
“The Department of Fertilizers is in the process of issuing a cabinet note proposing market development assistance for marketing of organic manure. This is expected to give a big boost to organic fertilizer manufacturers,” said a senior government official from a stakeholder ministry.
A second official familiar with the development said that in a recent meeting to review the Govardhan scheme, cabinet secretary Rajiv Gauba directed the petroleum ministry to plan to link CBG plants with their city gas distribution networks, wherever possible. be expedited.
“At present, CBG is transported through cascades to the network of fuel stations of Oil Marketing Companies (OMCs). This is a tedious, time-consuming process and costly. To guarantee offtake, CBG is transported to the city gas grid. Linkage with and seamless connectivity to the production units can make the entire project viable. Petroleum Ministry has been asked to complete the scheme at the earliest.
Ministry of Petroleum has already issued policy guidelines for blending of CBG with Natural Gas in City Gas Distribution network.
In addition, the sale of CBG has been started from more than 100 retail outlets.
Similarly, the Ministry of Urban Affairs is working aggressively to set up 75 CBG plants in urban areas. The second official said the ministry is working with local urban bodies and municipalities to create an enabling environment to make the projects viable.
what has been done so far
Several stakeholder ministries such as petroleum and renewable energy have already initiated several interventions to ensure that CBG plants become commercially viable.
The SATAT scheme launched in 2018 is one such initiative. Under this scheme, OMCs invite ‘Expression of Interest’ from potential CBG manufacturers to set up plants and buy CBG from them for sale at a nominal price.
The Ministry of Renewable Energy is already providing capital support for CBG plants.
DDWS is also providing financial assistance of up to Rs.50 lakh per district for the Gobardhan project.
In addition, loans to entrepreneurs for setting up of CBG plants have been included as an activity eligible for priority sector lending under agriculture infrastructure and allied activities.
From February 2023, Central Excise Duty exemption has been provided to CNG blended with CBG equal to the Goods and Services Tax (GST) paid on the biogas/compressed biogas contained in the blended CNG. This has been done to prevent double taxation.
Earlier, CBG was under GST while CNG attracted State Value Added Tax (VAT) and Central Excise.
As per these tax provisions, at the time of sale of CBG blended with CNG, it once again levied VAT and Central Excise on GST-paid CBG. “This has increased the total selling price of CBG-blended CNG,” said another official.
However, challenges remain.
One of the officials quoted earlier said the availability and high purchase price of the feedstock — which goes into manufacturing CBG — is a major challenge.
“The viability of the plant will increase if the purchase price of the feedstock is low. Not only should the feedstock be available, but the CBG should be close to the plant to make the project viable.”
According to government officials, developers are also facing difficulties in getting finance for CBG projects. There is a high demand for collateral and banks charge high rates of interest.
CBG is also an emerging sector where new technologies are being deployed. “Because of this, techno-commercial evaluation and approval of CBG projects take time,” said an official.
(Editing by Nida Fatima Siddiqui)
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