Set up your Bio CNG Plant
Expression of Interest (EoI) Invited by OMC’s (HPCL/IOCL/BPCL)
For Supply of Compressed Bio Gas (CBG)
(15 Year Guaranteed Agreement)
As you know that Public Oil Marketing Company’s (HPCL/IOCL/BPCL) has invited the Expression of Interest (EoI) from Applicant for Production and Supply of Compress Bio Gas (CBG) under the SATAT Scheme (Sustainable Alternative Towards Affordable Transportation) of Ministry of Petroleum and Natural Gas of Govt. of India.
You may read more about this EoI on our website blog at: https://kipfinancial.com/compress-bio-gas-a-big-business-opportunity/
Further in order to make better understanding of this business, we are sharing here with the major key points of CBG Project. It will assists to you in taking right business decision.
- What is Compressed Bio Gas or CBG ?
CBG or Compressed Bio Gas consist of mainly methane (more than 90%) and other gasses like carbon dioxide (less than 4%), etc. CBG is produced by anaerobic digestion of biomass and waste sources like agricultural residue, cattle dung, sugarcane press mud, municipal solid waste, sewage treatment plant waste, etc.
- Can a vehicle running on CNG be straightway filled with CBG without any modification in the vehicle ?
CBG has properties almost similar to CNG and hence a vehicle running on CNG can straightway be filled with CBG without any modification in the vehicle.
Ministry of Road Transport and Highways, Government of India, vide Gazette Notification no. 395 dated 16.6.2015 has permitted usage of CBG for motor vehicles as an alternate of CNG. BIS has issued IS 16087 2016 standards on CBG which is similar to BIS specifications IS 15958:2012 for CNG.
- How to Apply for Setting up CBG Plant?
You can submit EoI (Express of Interest) with Oil Marketing Company. Thereafter, Concern OMC will issue LoI (Letter of Intent) by making evaluation of your EoI.
- What are the application fees, EMD, Security Deposit, etc. for applying EoI ?
There is no application fees, EMD, Security Deposit etc. while applying for EoI.
However, the successful applicant after receiving Letter of Intent from the concerned Oil & Gas Marketing Company has to submit a BG of Rs 5 lakh per plant for proposed Plant, if the proposed Plant is yet to come or yet to be set up.
BG amount shall be Rs. 1 lakh per plant if the proposed Plant is already existing.
- What are the qualification criteria of EoI?
In case of the individual applicant, the applicant should be of minimum 21 years of age. The same will be ascertained in case of individual applicant on basis on any Government issued identification with age / date of birth mentioned.
In other cases applicant shall be of Indian nationality and/or a company registered in India and/or Non-Resident Indians/Persons of Indian Origin and/or a Multi-National Company having its registered office in India / Overseas Corporate Bodies having its registered office in India.
Evaluation of the EOIs shall be carried out of a total of 100 marks as described in the EOI document. The prospective applicant has to score minimum of 35 marks to qualify.
After submission of the documents through the e-tender portal, a committee of a particular OMC/GMC evaluates the EOI and awards Letter of Intent (LOI) to the successful applicant who had scored 35 marks or more on evaluation criteria.
- What will be the price given by OMC for CBG?
As per the EOI, OMC’s has offered a procurement price of CBG of Rs. 46/kg + applicable taxes. Gas should be compressed to 250 bar pressure and delivered to OMC/GMC Retail Outlets in cascades up to one way distance of 25 kms from the CBG Plant to the Retail Outlet.
Minimum procurement price will not be lower than Rs. 46/kg + applicable taxes for the period from 1.4.2024 to 31.3.2029.
- What will be agreement period for buying CBG?
OMC shall execute a Commercial Agreement of 15 years with the CBG Plant owner, to be extended on mutual consent.
- What are the various enablers by Government of India under SATAT scheme ?
- Reserve Bank of India has notified inclusion of CBG projects under Priority Sector Lending vide directives to Banks dated 4.9.2020.
- Inclusion of Bio-manure produced from CBG Plants under Fertilizer Control Order 1985 has been approved and notified vide Gazette Notification dated 14.7.2020.
- Ministry of New and Renewable Energy has extended Central Financial Assistance (CFA) Scheme on CBG.
- What is the subsidy on CBG Plant?
The Ministry of New and Renewable Energy has provided the financial assistance on CBG Plant as Following:
Rs 4 Crore for Plant producing 4.8 Ton per day of CBG (i.e 12000 Cubic Meter of Bio Gas per day) capped to Rs 10 Crore per Plant for 12 Ton Per Day or more per CBG plant.
- What is the Interest Subsidy on CBG Plant?
Compress Bio Gas Project has also covered under Agriculture Infrastructure Fund of Department of Agriculture of Govt. of India.
As Per AIF, Interest Subvention @ 3% per year for a period of 7 Year up to Bank Term Loan Amount of Rs. 2.00 Crore shall be available on CBG Project.
- Is Change in constitution of firm allowed after award of LOI or execution of commercial agreement ?
Change in constitution of firm is permitted by Indian Oil as a matter of routine affair either before/after award of LOI or execution of commercial agreement under SATAT scheme.
The process of reconstitution of firm is simple and the applicant has to only approach OMC/GMC through formal letter before effecting such changes and give commitment that the old and new reconstituted firm shall abide by the terms of EOI, LOI and commercial agreement. Further the old firm shall also give a parent guarantee undertaking along with request letter.
Approvals of reconstitution shall be provided as routine unless and until there is any compelling reasons,(like proposed changes not in conformity with the prevalent law of the country) due to which Indian Oil may refuse to grant the proposed reconstitution in the firm. In case the permission of reconstitution of firm is not granted by Indian Oil, citing the reasons, why approvals for proposed reconstitution of firm is not granted shall be conveyed to the applicant.
- Can Retail Outlet(s) outside the radius of twenty-five (25) kilometers from the CBG Plant be selected for sale of CBG ?
Retail Outlet(s) outside the radius of 25 kilometers from the CBG Plant can be selected for sale of CBG without any additional liability and financial implication to Oil & Gas Company.
- Our CBG Plant capacity may be increased at a later date. The CBG Plant may not want to provide the additional CBG quantity to the Oil & Gas Company who has awarded LOI. What is the provision for the same ?
In future, if CBG Plant increases their production capacity then respective OMC/GMC , shall not have any claim over the CBG quantity in excess of LOI quantity. This clearly means that it will be the sole discretion of CBG Plant owner to sell their CBG to any party for the quantity which are outside the purview of commercial agreement unless and until the commercial agreement quantity is suitably revised with mutual consent.
As per terms of the LOI awarded, LOI holder shall not enter into any agreement with a competitor of OMC/GMC with respect to the subject CBG Plant for which both Parties have entered into or are endeavoring to enter into a Commercial Agreement on supply of CBG.
- What are the payment terms for CBG?
Based on the joint ticket prepared recording the of CBG quantities sold, fortnightly invoices shall be raised by the Seller on the Buyer. Buyer shall make payments to the Seller in Indian Rupees, within15 Business Days from the date of receipt of the original invoice from the seller.
- Can a CBG Plant Owner installed his own CNG / CBG station?
Applicant may apply to Oil Company through a formal application to install his own CNG Station.
- Which feedstock is best for CBG production and should be used to get maximum financial viability of plant?
The type of feedstock to be used for CBG production and financial viability of a plant depends on many factors like cost of input feedstock, location of plant, etc. As per SATAT scheme, the responsibility of setting up of CBG plant lies with the entrepreneur and therefore applicant is requested to assess CBG production and financial viability of its plant by itself.
The following tentative yield of various feedstocks are normally considered as per discussion with various existing and proposed CBG Plants and various technology providers. However these are only directional in nature and actual yield may vary substantially depending on quality of feed stock.
|Feedstock||CBG Production(Ton)||Feedstock requirement (Tentative)|
|Agriculture Residue||1||10 Ton|
|Press Mud||1||25 Ton|
|Spent Wash||1||10 KL|
|Municipal Solid waste||1||20 Ton|
|Cow Dung||1||50 Ton|
|Chicken Litter||1||25 Ton|
|Forest Residue||1||15 Ton|
|Napier Grass||1||10 Ton|
|Sewage Waste||1||15 MLD|
- “If a new firm is constituted for application in the EOI, will experience in earlier entities be considered during evaluation of the EOI.
Only experience of the applying party shall be considered during during evaluation of the EOI.
Experience of parent company of a subsidiary / SPV or experience of directors in earlier firms / related companies will NOT be considered.
- Does the applicant need to change the land use for setting of CBG plant?
Change the Land use is mandatory for setting up the CBG plant.
CBG plant can only be constructed on commercial land.
- What are all the approvals required for setting up the CBG plant?
Following major approvals are required. However the list are not exhaustive and State / district Authorities may be approached for further clearances required (if any)
|Approvals Required||Before Construction (New Factory )||After Construction but Before Production / Operation||Annual Renewal|
|1||Land conversion to Non Agricultural (applicable for non-industrial land)||Conversion and registration||Not Applicable||Not Applicable|
|2||DIC (District Industry Centre)||Registration as MSME(Micro , Small & Medium Enterprises)||Not Required||Not Required|
|3||Fire||NOC (No Objection Certificate)||License||Required|
|4||Health & Safety||NOC||License||Required|
|5||IOF( Indian Ordinance Factories) – Plan approval||NOC,
BoCW Registration( Building & Other Construction Workers Registration)
|License (Sub contractor License)||Required|
|6||DTCP – District Town & Country Planning||Plan Approval & Tax||Not Required||Not Required|
|7||Local Panchayat||Plan submission, NoC and Tax payment based on construction area||Yearly tax (if applicable)||Not Required. Tax to be paid (if applicable)|
|8||BDO( Block Development Officer) – Running License||Not Required||Running License||Required|
|9||PCB( Pollution Control Board)||Consent for Establishment||Consent for Operation||Required|
|10||PESO( Petroleum and Explosives Safety Organization)||Consent for Establishment||Consent for Operation||Required|
|11||MNRE ( Ministry of New and Renewable Energy)||CFA( Central Financial Assistance) Approval||CFA approval after 72 hours plant operation||Not Required|
We hope you will get benefited with above said basic information for set up CBG Plant.
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For more details you may contact us at:
KIP Financial Consultancy Pvt. Ltd.
DSB – 38, KIP Complex, Red Square Market, Hisar – 125001 (HR)