The Centre is in the process of including compressed bio-gas (CBG) in the priority sector of lending to ensure ease of financing the setting up of CBG plants in the country, Union Minister Dharmendra Pradhan said on Tuesday.
The Union Minister of Petroleum and Natural Gas, along with Tamil Nadu Chief Minister K Palaniswami and Indian Oil Corporation chairman Sanjiv Singh and senior officials, inaugurated a compressed bio-gas plant at Namakkal in the state through video-conference.
Indian Oil and Oil tanking GmbH of Germany, through a joint venture, agreed to set up the CBG plant and five CBG retail stations for automobiles in the state.
The state-of-the art plant is to be set up under the Centre's sustainable alternative towards affordable transportation (SATAT) scheme and would produce CBG for supply to vehicles in the Salem-Namakkal region besides offering green fuel as an alternative to serve local industries.
The financial assistance to set up the CBG plants has been extended to 2020-21, Pradhan said, while pointing out that the Centre was also exploring global funds for CBG projects.
Indian Oil Corporation and Hindustan Petroleum Corporation Ltd have already been awarded 13 letters of intent in the state for production and supply of 30,000 metric tonnes of CBG per annum, he said.
The estimated investments in the plants would be around Rs 450 crore, which was expected to generate direct employment of about 200, he said.
The total CBG potential in Tamil Nadu from the existing bio-mass sources was estimated to be 2.4 metric million tonnes per year.
Utilisation of the entire potential would result in setting up of about 600 plants across Tamil Nadu at investments of around Rs 21,000 crore with potential to create 10,000 jobs, he said.
CBG is produced from bio-mass sources like agricultural residue, cattle dung and municipal solid and liquid waste through anaerobic digestion, Indian Oil said.
The gas can be substituted as a green renewable fuel in the transportation, industrial and commercial sectors.
Harnessing the full potential of bio-fuels to generate alternative energy in various forms whether it is CBG, ethanol or bio-diesel would go a long way in achieving Prime Minister Narendra Modi's vision of reducing dependence on crude oil imports while ensuring energy security for the nation, he said.
The oil and gas marketing companies have come up with long-term pricing on CBG and have agreed to execute long-term agreements to procure CBG, he said.
He hoped the plant inaugurated on Tuesday would function as a model that can be replicated across the country.
Palaniswami, in his address, thanked Pradhan for setting up the first CBG infrastructure and hoped that more such projects would be commissioned in Tamil Nadu. He said the state leads in the country on production of renewable energy capacity at 15,876 MW.
The major sources of renewable energy in the state are hydel energy (2,322 MW), wind energy (8,523 MW), solar energy (4,054 MW), biomass (266 MW) and other forms of such energy (714 MW).
Palaniswami said the state government would support any such initiative of the Ministry of Petroleum and Natural gas.
The IOCL chairman said CBG has properties similar to CNG and can be used in vehicles that run on CNG fuel without any modifications.
It is also suitable for industrial and commercial sectors given the abundance of biomass in the country, he said.
According to company officials, the Namakkal plant would process 290 tonne per day of feedstock to produce 15 tonne per day of CBG which shall be sold for use in vehicles from five petrol pumps in Namakkal and Salem besides two industrial units.
Indian Oil accounts for 309 letter of intents for production and supply of about 0.7 million metric tonne of CBG, they said.