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Business News/ Industry / Energy/  Indian Oil, HPCL, BPCL to invest Rs10,000 crore for Bio-CNG plants

Indian Oil, HPCL, BPCL to invest Rs10,000 crore for Bio-CNG plants

Indian Oil will set up Bio-CNG plants in North India, and BPCL and HPCL will replicate the model in rest of the country

Indian Oil in January signed an MoU with the Punjab government to set up biogas and bio-CNG plants in the state. Photo: Ramesh Pathania/MintPremium
Indian Oil in January signed an MoU with the Punjab government to set up biogas and bio-CNG plants in the state. Photo: Ramesh Pathania/Mint

Mumbai: State-run oil marketing companies Indian Oil Corporation (IOC); Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) plan to spend nearly Rs10,000 crore to set up Bio-CNG plants across India to promote clean fuel and reduce the country’s fuel import bill, two people aware of the development said.

The Bio-CNG plan will be detailed in the national biofuels policy to be released this month, the people added.

The policy will detail a Rs1 trillion investment opportunity under Waste-to-Wealth projects.

Bio-CNG is a purified form of biogas with over 95% pure methane. It is similar to natural gas in its composition (97% methane) and energy potential.

While natural gas is a fossil fuel, Bio-CNG is a renewable form of energy produced from agricultural and food waste.

“IOCL is taking the lead in terms of setting up plants for generation of Bio-CNG so that farmers can supply biomass instead of burning it. IOCL will buy back Bio-CNG and sell the same," said one of the people aware of the development, the first person quoted above.

He spoke on condition of anonymity as he is not allowed to speak to the media.

He added that while IOCL will execute the plan in north India, BPCL and HPCL will replicate the model in western, southern and eastern India.

This January, IOCL signed a memorandum of understanding (MoU) with the Punjab government to set up biogas and Bio-CNG plants in the state.

IOCL will be setting up a plant in Haryana shortly. In 2018, 42 plants will become operational which will be scaled up to 400 over the next three to four years.

“These Bio-CNG plants would be multiple in number and would be phased evenly so that 100-150 tonne per day rice straw becomes available. Converting bio-mass to compressed biogas and bio-CNG will not only help curb the menace of stubble burning but also create additional income for farmers," said the second person mentioned above, also speaking on condition of anonymity.

IOCL, BPCL and HPCL did not reply to Mint’s queries sent on 2 April.

Bio-CNG is seen as an environment-friendly alternative to diesel.

It can be transported either through injecting fuel into the CNG grid or by trucks or in cylinders from the filling stations. The average cost of setting up a Bio-CNG plant is around Rs40-50 crore.

“In the long run, the overall oil bill, which is pinching us is a challenge. And on the other hand, we have so much of renewable biomass available that we can definitely look at reducing the imports by 20% if not more by 2022," said the first person quoted above.

The cost of production of Bio-CNG could be around Rs23 a litre, cheaper than compressed natural gas (CNG), petrol and diesel.

“Today we are using CNG which is imported. Bio-CNG will easily replace that. This will save us nearly Rs40,000 crore in imports. Bio-CNG replaces both, diesel and petrol. Also, the static consumption for generating power, in remote places, today either consume diesel or CNG. But Bio-CNG can replace these too," added the second person quoted above.

India currently imports one-third of its energy requirement. The world’s third-largest crude oil importer targets halving its energy import bill by 2030.

The government aims to increase the contribution of gas in India’s energy mix to 15% from the current 6.5%.

At present, fossil fuels meet 95% of India’s transportation fuel requirement.

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Updated: 10 Apr 2018, 05:52 AM IST
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