In October 2018, the Ministry of Petroleum & Natural Gas, in collaboration with Public Sector Undertaking (PSU) Oil Marketing Companies (OMCs); introduced the Sustainable Alternative Towards Affordable Transportation (SATAT) initiative. This initiative aims to foster the establishment of Compressed Bio-Gas (CBG) production plants by inviting Expression of Interest from potential entrepreneurs. Under SATAT, entrepreneurs are encouraged to set up CBG plants, produce CBG, and supply it to OMCs for use as automotive and industrial fuels. The scheme plays a significant role in promoting sustainable energy practices and reducing dependence on traditional fossil fuels.

Compressed Bio-Gas (CBG) is a renewable fuel produced through natural anaerobic decomposition of biomass and waste sources like agriculture residue, cattle dung, and sewage treatment plant waste. After purification, it is compressed and has a methane content of over 95%, making it similar to commercially available natural gas. With a calorific value comparable to CNG, CBG can serve as a sustainable alternative automotive fuel, potentially replacing CNG in various sectors.

Interested parties can access the Expression of Interest (EOI) for the production and supply of Compressed Bio Gas (CBG) from IOCL, BPCL, and HPCL by visiting their respective websites. The EOI is free of cost, and there is no Earnest Money Deposit (EMD) required. The filled application, along with annexures compiled into a single PDF file, should be submitted online through the e-Tendering portal.

There are no fees, Earnest Money Deposit (EMD), or Security Deposit required when applying for the issuance of a Letter of Intent (LOI) under the SATAT scheme. However, upon receiving the LOI from the relevant Oil & Gas Marketing Company, the successful applicant must submit a Bank Guarantee (BG) of Rs 5 lakh per plant for a proposed plant that is yet to be established or Rs. 1 lakh per plant for an existing proposed plant.

The beneficiaries of the SATAT Scheme are entrepreneurs, farmers, and government entities involved in the production, distribution, and marketing of compressed biogas (CBG).

For individual applicants, a minimum age of 21 years is required, verified through any government-issued identification with the applicant’s age or date of birth. Other applicants must be either Indian nationals, registered Indian companies, Non-Resident Indians/Persons of Indian Origin, or multinational companies with a registered office in India, including Overseas Corporate Bodies with a registered office in India.

The evaluation of EOIs is based on a 100-mark system outlined in the EOI document, with a minimum qualifying score of 35 marks. Following submission through the e-tender portal, a committee from the relevant OMC/GMC assesses the EOIs and grants a Letter of Intent (LOI) to applicants scoring 35 marks or higher.

Upon receiving the LOI, the applicant must provide a bank guarantee of Rs. 5 lakh/plant for a new proposed plant or Rs. 1 lakh/plant for an existing plant. Once the bank guarantee is submitted, the LOI holder can proceed to execute a Commercial Agreement with the OMC/GMC for CBG production and supply.

The investment for a plant producing 4.8 tons per day of CBG (equivalent to 12,000 cubic meters of biogas per day) is set at Rs. 4 crores, with a cap of Rs. 10 crore per plant for capacities of 12 tons per day or more per CBG plant.

Oil and gas companies will aim to purchase and market the entire CBG production from the CBG Plant. However, the actual off-take of CBG depends on market demand.

The CBG market, especially in emerging areas, is expected to grow gradually, leading to a gradual increase in CBG supply from specific plants. A mutually agreed CBG supply plan will be finalized, aligning CBG production with market demand. Indian Oil will only purchase CBG corresponding to market demand.

Under the Commercial Agreement for CBG, if the Buyer (Oil & Gas Company) cannot purchase additional CBG quantities or facilitate sales to industrial bulk customers, the Seller has the full freedom to sell CBG to other parties as per its discretion.

Notably, there is no take-or-pay arrangement under the SATAT scheme.

The EOI specifies that the OMC/GMC offers a procurement price of Rs. 46/kg + applicable taxes for purified CBG meeting IS 16087:2016 standards, compressed to 250 bar pressure, and delivered to OMC/GMC Retail Outlets within a 25 km radius from the CBG Plant. 

This procurement price is valid from 1st October 2018 to 31st March 2024, with periodic revisions starting from 1st April 2024. The minimum procurement price after 1st April 2024 will not be lower than Rs. 46/kg + applicable taxes until 31st March 2029. 

Additionally, the OMC/GMC will enter into a 15-year Commercial Agreement with the CBG Plant owner, extendable based on mutual consent.

Retail outlets beyond the 25-kilometer radius from the CBG Plant can be chosen for CBG sales without imposing any extra liability or financial burden on the Oil & Gas Company. However, any additional expenses related to transporting CBG beyond this distance will be the responsibility of the CBG Plant owner.

LOI holders will not be reimbursed additional transportation cost for transport of CBG beyond 25 km.

If the CBG Plant increases its production capacity in the future, the respective OMC/GMC will not have any rights to the excess CBG beyond the LOI quantity. This grants the CBG Plant owner full discretion to sell CBG to any party for quantities not covered by the commercial agreement, unless the agreement is appropriately revised with mutual consent.

Furthermore, as per the terms of the awarded LOI, the holder is prohibited from entering into agreements with competitors of the OMC/GMC regarding the subject CBG Plant for which both parties have or are seeking to establish a Commercial Agreement for CBG supply.

The Seller will issue fortnightly invoices to the Buyer based on the joint ticket documenting CBG quantities sold. Payments in Indian Rupees are due from the Buyer to the Seller within 15 business days from receiving the original invoice.

• Land conversion to Non-Agricultural (applicable for non-industrial land)
• DIC (District Industry Centre)
• Fire
• Health & Safety
• IOF (Indian Ordinance Factories) – Plan approval
• DTCP – District Town & Country Planning
• Local Panchayat
• BDO (Block Development Officer) – Running License
• PCB (Pollution Control Board) – Consent for Establishment or Operation
• PESO (Petroleum and Explosives Safety Organization) – Consent for Establishment or Operation
• MNRE (Ministry of New and Renewable Energy)

• The following is the list of Public Sector banks have developed a new loan product titled specifically for CBG Plants under SATAT:

  • State Bank of India
  • Canara Bank
  • Bank of Baroda
  • Punjab National Bank
  • Union Bank