From bundling the bio manure created during Compressed Bio Gas (CBG) production with fertilizers like urea, and mandating higher rates for CBG, the Sustainable Alternative Towards Affordable Transport (SATAT) scheme is now being tweaked to generate more interest from entrepreneurs, officials said.
Launched in 2018, SATAT aims to incentivise the production of compressed biogas (CBG) from various biomass sources. Given the abundance of biomass in the country, CBG has major potential to support the development of alternate clean fuel for automotive, industrial, and commercial uses in the coming years.
The government had proposed that CBG plants be primarily set up through independent entrepreneurs. But the initial target of having 5,000 CBG plants over the next five years has faltered and the government was refocusing its approach to the scheme, officials had told Business Standard in October 2022.
Subsequently, the Parliamentary Standing Committee on Petroleum and Natural Gas noted in December the scheme was “burdened by lack of clarity, procedural hurdles and has not enthused the investors and entrepreneurs to come forward to set up CBG plants”.
Case in point, only 35 plants have come up under the SATAT initiative till July, the ministry has informed Parliament. Since then, a single plant has gone live in Punjab’s Sangrur with a capacity of 33 tonnes of CBG per day.
Work in Progress
However, officials said a large number of plants are set to go live soon although its earlier plan of 40 new plants by March 2023 would not be possible.
The Committee had also recommended the Petroleum Ministry should set up a panel to review the Letters of Intent (LoIs) issued so far and also issue guidelines for fresh LoIs.
It had pointed out that as of June 1, 2022, as many as 3,263 LoIs had been issued by oil PSUs such as IOC, HPCL, BPCL, GAIL and IGL. However, land has been finalised only in 328 cases and only 97 LoIs had achieved financial closure.
Officials however said no review of the LoIs already issued is planned. “We will instead work on making new LoIs more lucrative for the industry,” an official said.
More inter-ministerial talks on the scheme are also planned, he added. SATAT has wide-ranging financial implications given how the government is currently incurring Rs 75,000 Crore worth of capital expenditure for setting up infrastructure for city’s gas distribution network. This network is expected to later carry the CBG produced under SATAT, after being synchronized with CNG.
Research institutes working with the government have suggested the need for reinstating the New National Biogas and Organic Manure Programme, which had run till March 2021. Run by the Ministry of New and Renewable Energy, the programme helped producers in setting up biogas plants.
Going forward
SATAT ensures that oil-marketing companies (OMCs) provide floor prices for the off-take of CBG for the first 10 years through upfront long-term agreements. But the high cost of settling up plants, the low remuneration model, and other factors have led to low interest.
CBG produced at these plants is transported through a cascade of cylinders to the fuel station network of OMCs for marketing as a green transport fuel alternative.
But industry insiders say these prices are too low, and the agreements provide them little room to alter the supply based on market conditions such as the seasonal availability of raw materials. In their submission to the Parliamentary Standing Committee, they have also argued that transportation remains a major difficulty.
Officials said the rate for CBG plants under the SATAT scheme has already been raised from Rs. 46 per kg to Rs. 54 per kg. They stressed the government plans to further increase the rate paid for CBG generated.
