Mumbai: To promote the use of clean fuel, the oil ministry plans to set up bio-CNG (compressed natural gas) plants and allied infrastructure at a cost of Rs7,000 crore, two people aware of the plan said.
The oil ministry will be working with state-run oil and gas retailers to set up the plants over the next two years, the people said on condition of anonymity.
Bio-CNG is a purified form of biogas with over 95% pure methane gas. 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.
Bio-CNG is being looked at as an environment-friendly alternative to diesel.
Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd are the state-run oil marketing companies that the oil ministry will team up with to implement the plan. Gas marketer GAIL India Ltd will also be involved.
“The government would be setting aside around Rs7,000 crore to set up infrastructure for bio-CNG. The funding could be channelled through the oil and gas marketing companies," said an official with an energy firm, one of the two people cited above.
“The government’s plan is to make India a gas-based economy. In addition to other alternatives, setting up of multiple bio-CNG plants in the country is part of this goal," said the second person, a senior official from one of the oil marketing companies.
Indian Oil, Bharat Petroleum and Hindustan Petroleum did not reply to emails sent on 22 December.
Setting up the infrastructure would be a priority. A typical bio-CNG station comprises a biogas purification unit, a compressor and a high pressure storage system.
“Unless infrastructure is in place, lifting of the fuel will not happen so government and companies have to ensure there are no infrastructure bottlenecks," said the first person.
The cost of production of 1kg of bio-CNG could be Rs15-20, cheaper than CNG, petrol and diesel.
Transportation of bio-CNG could either be through injecting the fuel into the CNG grid or by trucks or in cylinders from the filling stations.
India currently imports one-third of its energy requirement. The world’s third-largest crude oil importer is targeting 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%.