Budget 2023: FM proposes to allocate Rs10,000 crore for compressed bio-gas plants

A biogas plant (Represen

In her budget speech, finance minister Nirmala Sitharaman earmarked Rs 10,000 crore from the Union Budget for 2023-24 towards setting-up of 200 compressed bio-gas (CBG) plants and 300 community and cluster based biogas plants. With energy transition in focus, the minister also announced duty cuts for certain blended fuels.

A five percent CBG mandate is also on the anvil, the finance minister said.

“In due course, a 5 per cent CBG mandate will be introduced for all organizations marketing natural and bio gas,” Sitharaman said in her speech. GAIL, Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) are some of the companies with existing plans for CBG plants.

The minister said, under the GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) scheme will be established for promoting circular economy. These will include 200 compressed biogas (CBG) plants, including 75 plants in urban areas, and 300 community or cluster-based plants at total investment of Rs 10,000 crore, she added.

“The 'green growth' strategy and its focus on a "lifestyle for the environment" will help create a cleaner, greener, and more prosperous future for all Indians," said Gaurav Kedia, Chairman,  Indian Biogas Association.

Duty Cuts for energy transition

The finance minister announced exemption of basic custom duty on denatured ethyl alcohol is used in the chemical industry. “This will also support the Ethanol Blending Programme and facilitate our endeavor for energy transition,” she said. Also on proposed exemption list, is excise duty on GST-paid (on) compressed bio gas contained in blended compressed natural gas, the minister added.

Companies such as Praj Industries are expected to gain from increased bio-gas capacity additions. The company stock was trading 4.56 percent higher on the Bombay Stock Exchange (BSE) at 1:00 pm on Wednesday.