India imports nearly 50% of its natural gas requirements, and this figure is set to increase due to growing demand and declining domestic production. City gas distribution (CGD) companies, which rely on domestically sourced gas priced at 6. 5/MMBtu (administered price mechanism (APM) gas), are likely to encounter challenges as APM volumes diminish. This decline would compel CGD companies to explore to other supply options such as LNG markets. Faced with this challenge, compressed biogas (CBG) emerges as a viable substitute to offset the decline in APM gas volumes. Currently priced at a premium, CBG can be unaffordable for many price-sensitive sectors. Nevertheless, upcoming government mandates requiring CGD companies to enhance their CBG share from fiscal year 2026 could spur its adoption. A strategic approach to link CBG pricing with LNG import prices could enhance CBG’s economic viability and usher in investments. This alignment not only aims to reduce import bills but also positions CBG as a competitive supply option for CGD companies and other sectors, thereby contributing to India’s broader objective of decreasing energy imports bill.
Ashish Ranjan (Mon,) studied this question.