Cabinet Clears Rs 23,731 Crore GOBARdhan Scheme to Boost Compressed Biogas Production

The Union Cabinet has approved the National Circular Bioenergy Scheme, known as GOBARdhan (Galvanising Organic Bio-Agro Resources Dhan), with an outlay of Rs 23,731 crore. Spanning a 10-year implementation timeline from FY2027 to FY2036, the policy aims to expand domestic compressed biogas (CBG) output nearly tenfold while reducing reliance on imported liquefied natural gas (LNG).

What Happened

The approval comes as supply disruptions in international transit routes, particularly the Strait of Hormuz, emphasize India’s exposure to global energy shocks. India presently imports approximately 50 percent of its natural gas needs, with an estimated 55 to 60 percent of its LNG shipments moving through the Strait of Hormuz. Information and Broadcasting Minister Ashwini Vaishnaw stated that domestic compressed biogas serves as a critical alternative during periods of geopolitical uncertainty.

The government estimates the initiative will create a domestic biogas sector valued at roughly Rs 75,000 crore and generate foreign exchange savings exceeding Rs 40,000 crore across the 10-year period by cutting LNG imports. The programme builds upon the existing Sustainable Alternative Towards Affordable Transportation (SATAT) initiative, under which more than 200 CBG plants have been commissioned nationwide.

Key Highlights

• Ten-Year Timeline: Implementation is scheduled across a decade, running from FY2027 to FY2036 with total funding of Rs 23,731 crore.
• Mandatory Blending: City Gas Distribution (CGD) entities will face mandatory CBG blending targets of 3 percent in FY2027, 4 percent in FY2028, and 5 percent from FY2029 onward for both transport CNG and piped natural gas (PNG).
• Fixed Pricing: An administered price of Rs 2,110 per million British thermal units (MMBTU) has been set to provide long-term revenue visibility for producers.
• Capital Subsidies: Eligible greenfield CBG plants can receive financial support of up to Rs 2 crore per tonne per day of installed capacity, with assistance also extended to brownfield expansion projects.
• Infrastructure and Financing: The scheme provides funds for pipeline connections between CBG plants and city gas or trunk networks, alongside a dedicated credit guarantee mechanism for micro, small, and medium enterprises (MSMEs).
• Feedstock and Challenge Fund: A Challenge Fund will support district-level feedstock collection, technology integration, and project development using cattle dung, agricultural residue, municipal waste, and sugar industry press mud.

Why This Matters

According to government details, converting agricultural residue, press mud, cattle dung, and municipal organic waste into CBG will help mitigate import vulnerabilities while improving agricultural waste management. The production process also yields organic manure and provides supplementary income channels for rural entrepreneurs and farmers.

What to Watch Next

Implementation will commence ahead of the FY2027 rollout, including the deployment of the Challenge Fund, the activation of the MSME credit guarantee framework, and the initial phase of mandatory 3 percent blending across city gas networks.

Frequently Asked Questions

What is the total budget and duration of the GOBARdhan scheme?

The Union Cabinet has sanctioned Rs 23,731 crore for the scheme, which will be implemented over 10 years from FY2027 to FY2036.

What blending targets are set for city gas distributors?

City Gas Distribution companies will be mandated to blend CBG at 3 percent in FY2027, 4 percent in FY2028, and 5 percent from FY2029 onward across transport CNG and domestic piped natural gas.

What price will producers receive for compressed biogas?

The government has set an administered price of Rs 2,110 per million British thermal units (MMBTU) to improve financial viability for producers.

Source: Based on official information shared following the Union Cabinet briefing via Firstpost.