Only a fraction of nearly 900 entrepreneurs who submitted letters of intent to set up compressed biogas (CBG) plants to oil marketing companies (OMCs), including Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd, have come forward to implement their plans.
The lack of an established ecosystem in terms of pricing and gas offtake is holding entrepreneurs back from installing the plants, officials at the OMCs said.
CBG is produced by anaerobic decomposition of agricultural waste, sugarcane press mud and municipal waste. It can be used as a fuel for automobiles. “OMCs are not guaranteeing 100% offtake from day one, saying that after the plants are constructed, the companies may take 18 months to offtake full capacity. That is causing an ecosystem challenge, and entrepreneurs are negotiating with OMCs on this,” said an official who is part of the discussions, seeking anonymity.
OMCs have said producers can sell gas to third parties if they exercise their first right of refusal. “This is putting entrepreneurs in a fix. If OMCs don’t pick up gas, where will they find users?” the official asked. The OMCs did not respond to email queries till press time.
OMCs have a mandate to set up 50-60 CBG plants within two-three years. On 9 March, HPCL partnered with Praj Industries to set up a CBG plant at Badaun in Uttar Pradesh.