MNRE Biomass Subsidy for Pellets – Now became Easier

1. Simple IP Approval Process (Before Starting Production)

This means firstly you need to line up IP applications with the Ministry before the commencement of production in your unit, which is available on the Bio Urja portal. So, when you are planning unit before production, like that when you are applying loan or setting up your machinery during the same period, you should submit your MNRE IP application for the capacity of the plant you want to set up.

After IP approval, you need to claim the subsidy. This process has been simplified.

Now you have to apply for IP approval. After that, when you commence production, during the time, there are implementing inspections, where nodal agencies like IREDA or other allied agencies inspect your site. After the inspection, based on the production capacity framed, you are given subsidy benefits. The application filing used to take a long time, and there were some technical hitches. Now, the department has simplified it a lot.

2. Techno-Economic Report No Longer Mandatory

The old process required you to submit a techno-economic viability or feasibility report on the Bio Urja portal and this techno-feasibility report had to be signed by your banker from whom you had taken the bank loan. Many times, customers faced problems where bank hesitated to sign or certify such techno-feasibility reports because they are not aware of the technical aspects; they are well-versed with the financial feasibility of your project, but not on the techno-feasibility aspects. This used to create a lot of hassle between bankers and investors, and sometimes there were delays in application filings.

Now, the clause of techno-feasibility reports has been formatted out that mean you no longer need to submit this report. This will greatly simplify the process of submitting applications and lining up your claiming process.

3. No More Site Photos & EIA Report

The next amendment is that earlier they used to take high-resolution photographs of the site. You had to submit full-resolution photographs of your site along with the applications. This has also been removed.

Along with this, there was a clause that required you to submit an EIA (Environment Impact Assessment) report, which is generally required for highly hazardous items to assess the environmental impact of their production. That clause has also been removed for biomass briquettes and pellets, which will simplify things a lot. You will not need an EIA certificate.

4. Sales Agreement Flexibility

In addition to this, after our inspection, when we submitted the claiming documents, there was a provision from the ministry for a two-year sales agreement. You had to submit a copy of a contract agreement showing that you had an agreement to sell biomass pellets for two years. This was also a very tough provision because generally, when we are producing, it was not necessary to have such an agreement for a two-year timeframe. However, now they have simplified it a lot.

You can submit any copy of an off-take agreement, meaning an agreement to pick up or sell your pellets from your plant in the future, or any sales agreement. This means they have removed the two-year condition; it is no longer mandatory for it to be at least two years. So, you can have any sales agreement, or a future off-take agreement.

Sometimes, when your production hasn’t started and how can you have a sales agreement in hand?

So in this case, you can show an off-take agreement, if you start production, any XYZ buyer will have an agreement with you that you will sell to them. The timeframe has also been removed, so it’s not mandatory for it to be two years, whether it’s one year or six months. You just need to submit some sales or off-take agreement so that the Ministry has an assurance that what you are producing, you are also ready to sell. This is a very good provision.

5. IoT-Based Monitoring Allowed (Instead of SCADA)

Along with this, there was a very technical and difficult point that troubled many investors: you had to set up a SCADA system or install a remote monitoring system at your unit to measure production capacity. Because the entire subsidy is tied to your plant’s production capacity, the Ministry needed to ensure what your unit’s production was and what capacity you produced to measure it. For this, a SCADA system or a remote monitoring system had to be set up, and its login details and production details had to be submitted to the Ministry.

Now, the Ministry has given a lot of relaxations here. You no longer need any Internet of Things (IoT) based monitoring system, meaning any internet-based monitoring system through which you can confirm your site’s production. It’s very simplified: you can install any IoT-based monitoring system and share that data with the department, or give an undertaking where you submit the quarterly production of biomass pellets or briquettes to your department on a quarterly basis. It’s very simplified; you can install any IoT-based monitoring system and share that data with the department so they can ensure that your production size meets the requirements, and the department will release grants or subsidies accordingly. So, you can now take advantage of this simplified process. Now, avail subsidy benefits from MNRE will be very easy for you, and the processing delays will also be reduced to a great extent.

So, do not have any doubts in your mind that you will not get MNRE benefits or that there are long delays. The department has shown very good initiative in this, and the biomass sector’s growing stage across the country is very good for industries.

Recently Damodar Valley Corporation has invited tender for Biomass pellets at 5 locations of thermal power plants in West Bengal. You can get details of these tenders from our website or by contacting our team.

We want to tell you what other simplified provisions they have lined up. The next important aspect is that previously, after you had submitted your IP application and meanwhile your production started, you had to give prior intimation to the Ministry that you had started production. However, the model for that was not defined – how to give prior intimation, whether by mail, by documents, physically, or if there was any option on their portal to intimate them. This used to cause many problems.

Now, the Ministry has lined up this provision on the Bio Urja portal itself. This means that when you start production in your units, you will now be able to update this intimation on the portal. This will make it very easy for you to give your intimation to the Ministry because it used to be very tough before.

6. Production Operation Time Reduced from 16 to 10 Hours

This is basic and main aspect that caused problems for many business units was that the inspection agencies for the inspection of your plant to measure how much production your machine or plant is doing per hour, previously considered at least 16 hours of operating working hours per day. This means that to measure your plant’s performance, it was mandatory for your plant to operate for 16 hours a day. Your production capacity was measured accordingly. However, many investors or businesses faced the problem that due to not having orders, they could not operate their plant continuously for 16 hours, and that too for three consecutive months because they tracked performance for three months. This was a big problematic issue. So, the Ministry considered this and has simplified it very well.

Now, instead of 16 hours, 10 hours per day of operations will be considered. This means that to measure your production capacity, your plant should run for at least 10 hours a day according to the new norms. This will simplify things; you can operate your plant for at least 10 hours and get your production capacity measured.

7. Simplified Performance Benchmark for Full Subsidy

Along with this, the incentives you received, or what we call CFA (Central Financial Assistance), and how much you would receive – whether 100% or less, and at what capacity how much you would receive – this was also a big confusing factor.

For example, You took IP for 5 TPH (tons per hour) production capacity. However, when your production is measured, how much is that production? What percentage of your rated capacity have you achieved? Because generally, 100% of the rated capacity is not possible, it means if your plant is 5 TPH, you may not be able to produce exactly 5 TPH. Here, it has been simplified a lot.

If your production capacity is 80% or more of your rated capacity, you will be given 100% CFA. Simply put, if your rated production capacity is 5 tons per hour, then 80% of 5 is 4. So, if during the performance inspections, your plant’s production per hour is 4 tons or more, then you have achieved 80% or more of your rated capacity, and you will get full grants and full subsidy benefits as per your rated capacity, which is lined up for 5 tons.

However, if you are unable to achieve 80% of your rated capacity, they have set a benchmark here. If you achieve 50% or less of your rated capacity, you will not get any benefit. If you achieve between 50% and 80%, you will get a proportionate benefit.

For example, you don’t reach 80%, you come to 70%, it means your rated capacity was 5 tons, and your production came out to be 3.5 tons, then the subsidy benefit you receive will be proportionate.  If it were 80%, you would get 100%. Now it’s 70%, so you will get (100 / 80) * 70 = 87.5%. So, you will now receive 87.5% of the expected subsidies you were planning for. This is a very good and simplified method they have lined up here. You will not be required to run the plant regularly for 16 hours. Now the minimum has been made 10 hours and if you can achieve 80% or more of the rated capacity, you will get full subsidy benefits. If it’s below that, it’s proportionate, and if you go below 50%, you will not get any benefit.

8. Only Pellet Manufacturing Is Eligible for Subsidy

Along with this, they have now simplified it that you have to line up a 1-minute video of your running plant with a geographical tag so that they can be assured that your plant is in operation. This is a very simplified process, which will give you a lot of ease. The department has also provided a clarification here, which is very important. Many of our clients used to set up combined plants for both briquettes and pellets, or plan to do, they would get benefits for both briquettes and pellets.

But now, the department has clarified here that you will only get benefits for pellet manufacturing. So, please pay a little attention if you set up both machines in your plant. This means that whether it is non-torrified or torrified, you will get subsidy benefits only for setting up new machinery, not for old machinery, and exclusively for pellets only.

9. One Subsidy Scheme at a Time (MNRE or CPCB)

Along with this, the Ministry has also lined up another clarification regarding the NCR area, which includes Haryana, Punjab, and the areas around Delhi. Here, if you have heard or seen in our previous videos and ebooks, the Central Pollution Control Board (CPCB) also used to give one-time financial incentives. Many investors and businessmen used to get confused whether they could take both benefits  or only one, or take the CPCB benefit, or its increased amount, because 40% was allowed in that, and 30% was allowed in this for machinery cost.

So, there was quite a lot of ambiguity in the market. Here, the Ministry has clarified that you can only avail one of the two benefits. Either you take CPCB’s benefit or MNRE’s. And you also have to give an undertaking for this. This has been clarified very well: you can only avail one of the two benefits. When you take this benefit from the Ministry, you have to give an undertaking stating that you have not taken any benefit for the same plant from CPCB. So, the Ministry has removed your doubts and clarified this.