India just guaranteed a price and a buyer for compressed biogas for ten years

On August 6, 2026 India’s Union Cabinet approved GOBARdhan, the National Circular Bioenergy Scheme, with an outlay of ₹23,731 crore for fiscal 2026-27 to 2035-36, administered by the Ministry of Petroleum and Natural Gas. Its offtake guarantee is a compressed-biogas (CBG) blending obligation on city gas distributors of 3% in 2026-27, 4% in 2027-28 and 5% from 2028-29, across transport CNG and domestic piped gas.

The scheme also sets an administered price of ₹2,110 per MMBtu (about ₹105 per kilogram) with a minimum ten-year horizon, up from ₹1,478; capital assistance of up to ₹2 crore per tonne-per-day of installed capacity, including feedstock-aggregation and manure-processing assets; pipeline connectivity support; a credit guarantee for smaller developers; and a district-level ecosystem fund.

More than 200 CBG plants have been commissioned under the predecessor SATAT programme launched in 2018, which had targeted 5,000; the new scheme aims for a near ten-fold increase in output. On August 30, 2026 the ministry said the Centre will fund ₹10 per kilogram of affordability support (about ₹215 per MMBtu), leaving roughly ₹1,895 per MMBtu to be recovered across the gas consumer base, and called the impact on CNG and piped-gas consumers negligible. Reliance Industries has committed to build 55 CBG plants. The ministry has since issued an office memorandum to implement the scheme.

Listed companies along the chain have not repriced. Praj Industries, India’s main biofuel and CBG technology and engineering supplier, closed at ₹338.9 on September 8, 2026, up 6.6% since August 5 and still 18% below its May 5, 2026 high of ₹415.5; Everest Kanto Cylinder, which makes the cylinder cascades used to move gas from plants to networks, is down 5.8% since August 5; Indraprastha Gas and Mahanagar Gas, the obligated buyers, are flat over the same period (Yahoo Finance daily closes).

Opportunity

The obvious reading is a rural-welfare and waste-management scheme. Structurally it is an industrial offtake contract: a fixed ten-year price 43% above the old one, a mandated buyer, and a capital subsidy per tonne of capacity. That combination is what turns a marginal project into a bankable one, and it is aimed at forcing several hundred plants to be built over a few years, each needing digesters, gas-upgrading units, compressors, cylinder cascades or pipeline tie-ins, and a feedstock supply chain of balers, trucks and storage.

Who is forced to spend: developers including Reliance, the state oil companies’ joint ventures and private operators. Who supplies them: engineering and technology firms such as Praj, cylinder and cascade makers such as Everest Kanto, compressor and membrane suppliers, and farm-machinery makers for straw collection. The obligated buyers — Indraprastha Gas, Mahanagar Gas, Adani Total Gas — must purchase gas at around ₹1,895 per MMBtu, several times the price of domestically allocated natural gas, with a “market-based cost-sharing mechanism” that has not yet been specified.

Hypothesis: the scarce link is not capital but feedstock aggregation and gas evacuation, which is why the 2018 programme delivered 200 plants against a 5,000 target; the companies that solve aggregation and evacuation capture margin that developers bid away, and their order books inflect twelve to twenty-four months before CBG volumes appear in gas statistics. A second inference: unless pass-through is clean, the blending obligation lands as a cost on the city gas distributors, making them the overlooked losers of a scheme sold as a farmer benefit.

How it could play out

A fixed price and a mandated buyer make project returns bankable, so plant tenders and financial closures accelerate through fiscal 2026-27 and 2027-28. Engineering, equipment and cylinder orders lead gas output by a year or two, so suppliers’ order books move first.

Feedstock aggregation either scales — in which case output rises toward the 3-5% obligation and the scheme’s ₹23,731 crore is drawn down on schedule — or it does not, in which case a better price mostly lifts the returns of the 200 existing plants and the obligated distributors buy what little exists at a premium. Either way the distributors’ cost-sharing rules, once published, decide who pays.

Questions worth asking

• What is the current all-in capital cost per tonne-per-day of a crop-residue CBG plant, and what project return does ₹2,110 per MMBtu plus ₹2 crore per tonne-per-day imply — enough to draw private capital at scale? This is the question that decides the idea.
• How much gas does the 3% obligation on CNG and piped gas represent, how much of it can the existing 200 plants supply, and how many new plants does the 5% level force?
• Who supplies the gas-upgrading and compression equipment for Indian CBG plants — domestic firms like Praj or imported membranes and compressors — and what is Praj’s share of CBG orders?
• Does the market-based cost-sharing mechanism protect the city gas distributors’ margins, or does the obligation land on Indraprastha Gas, Mahanagar Gas and Adani Total Gas as a cost?
• Is there any way for a non-Indian investor to express this — depositary receipts, India small-cap funds, or listed foreign suppliers of membranes and compressors?

Where to look

• Praj Industries (NSE: PRAJIND) — India’s biofuel and CBG technology and engineering leader, still 18% below its May 2026 high
• Everest Kanto Cylinder (NSE: EKC) — cylinders and cascades needed to move CBG from rural plants to distribution networks
• Indraprastha Gas (NSE: IGL), Mahanagar Gas (NSE: MGL), Adani Total Gas (NSE: ATGL) — the obligated buyers, whose exposure depends on pass-through
• Reliance Industries (NSE: RELIANCE) — the largest committed developer with 55 plants, immaterial to its size
• GAIL (NSE: GAIL) — pipeline connectivity and city-gas holdings on both sides of the obligation
• Farm-machinery makers selling balers and straw-handling equipment — the aggregation bottleneck

Thesis check

The policy is primary-source with three hard numbers — price, obligation trajectory and subsidy — on a ten-year horizon, and the listed supply chain has not moved since the August 6, 2026 approval. The weak link is that India’s 2018 SATAT programme promised 5,000 plants and delivered about 200 because feedstock aggregation and gas evacuation failed, not price; if that constraint is physical rather than financial, a higher price mostly raises returns on existing plants, and the investable names — Praj Industries, Everest Kanto and the city gas distributors — are Indian-listed only, with no clean foreign proxy.

Sources

Prime Minister of India, Aug 6 2026 · Renewable Watch, Sep 8 2026 · Business Standard, Aug 30 2026 · Business Standard, Aug 6 2026 · Agrospectrum India, Aug 2026