State-owned oil companies are set to play a key role in tackling Delhi’s annual affair with rising air pollution levels due to stubble burning, by setting up around 250 compressed biogas plants over the next one or two years.
Compressed biogas, or CBG, is produced by anaerobic decomposition of agricultural waste, sugarcane press mud and municipal waste. It can be used as a fuel for automobiles.
Oil marketing companies—Indian Oil Corp. Ltd (IOCL), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL)—which are setting up 2G ethanol or bio-refineries, will have 20 CBG plants each on the sites, said two oil company officials, requesting anonymity.
“We have a mandate to set up 50-60 CBG plants. This will encourage entrepreneurs and private companies to enter this segment," the first official said.
So far, 515 letters of intent (LoI) have been issued to oil companies and private entities to set up CBG plants, including 126 in Uttar Pradesh, 75 in Maharashtra, 59 in Haryana, 35 in Andhra Pradesh, 24 in Punjab, seven in Delhi, 32 in Gujarat, 25 in Karnataka, 24 in Madhya Pradesh, 22 in Chhattisgarh, 16 in Tamil Nadu, 13 in West Bengal and 11 in Bihar. Odisha, Uttarakhand and Telangana will have nine each, Jharkhand will have seven, Rajasthan five, and Goa, J&K and Assam two each.
“We are expecting around 50 CBG plants over a year or two. Once that happens, we expect a greater number of people joining in," the second official said. On 1 October 2018, the government had launched the Sustainable Alternative Towards Affordable Transportation under which 15 million metric tonnes of CBG was to be produced. But the scheme did not take off due to lack of financing.
Now, with RBI recently according priority sector lending of up to ₹30 crore for CBG projects, companies will find it easier to secure funding for setting up such plants. “We will fund the project based on an offtake agreement and it will be a term loan for 10-12 years and a maximum permissible repayment period of 15 years, including moratorium," said C S Setty, managing director, SBI.