Why your CNG now has biogas in it: India's CBG blending obligation, explained

If you fill CNG in Delhi, Mumbai or Bengaluru, part of what goes into the cylinder is no longer fossil gas. It is compressed biogas, or CBG, made from municipal waste, cattle dung, press mud and farm residue. The blending is done upstream, in the city gas network, before the gas reaches the dispenser. There is no second nozzle, no kit change and no separate price for it. Your car simply gets a kilogram of gas, as before.

The mandate is called the CBG Blending Obligation, or CBO. It was voluntary till FY 2024-25 and became mandatory from FY 2025-26 at 1 per cent of total CNG and domestic PNG consumption. It is 3 per cent for FY 2026-27, 4 per cent for FY 2027-28 and 5 per cent from FY 2028-29 onwards. The Petroleum Planning and Analysis Cell acts as the Central Repository Body that monitors it.

What CBG is, and why the pump does not change

Raw biogas from a digester is roughly half methane and half carbon dioxide, with hydrogen sulphide and moisture in it. A CBG plant scrubs out the carbon dioxide and the sulphur, dries the gas and compresses it. What is left is methane-rich gas, close enough in composition to pipeline natural gas that it can be injected into the same city gas grid. The government's own price for CBG is set at 95 per cent methane content, which tells you the purity the plants must hit.

That is why the blend is invisible to an owner. CNG is sold by mass, not volume, and the dispenser does not care whether the methane came from a gas field in the Krishna Godavari basin or from Mumbai's vegetable market waste.

What it does to the price you pay

In August 2026 the Centre approved the GOBARdhan scheme for CBG with an outlay of ₹23,731 crore, running from 2026-27 to 2035-36. Producers get an Administered CBG Price of ₹2,110 per MMBTU, which works out to ₹98 a kg at 95 per cent methane, with government support capped at ₹10 a kg. Up to 100 per cent of a plant's output is eligible for assured offtake, and city gas companies have to sign agreements within three months. Capital assistance is ₹1.25 crore per tonne per day of new capacity, up to ₹30 crore a project.

The cost of all this has to land somewhere, and the Budget presented on 1 February 2026 softened it. Central excise duty of 14 per cent applied to both pure and blended CNG. The biogas component of blended CNG is now excluded when excise is calculated, so the more CBG a retailer blends, the smaller the taxable share. PPAC has also notified an additional price adjustment factor for CBG, effective 1 September 2026, which is how the pricing is being tuned as volumes grow.

The supply side is the bottleneck. About 190 CBG plants had been commissioned by early 2026, against the 5,000 plant ambition of the 2018 SATAT scheme, and blending has been running below 1 per cent.

The Bengaluru plant to watch

GAIL signed a 25 year concession with the Greater Bengaluru Authority and Bengaluru Solid Waste Management Limited on 28 October 2025 for a CBG plant at the KCDC site in Haralakunte village. GBA gives 18 acres, BSWML supplies 300 tonnes a day of segregated municipal waste, and the plant is to make 12.6 tonnes a day of CBG plus about 22 tonnes a day of fermented organic manure.

Mumbai has a bigger one coming. Mahanagar Gas signed with the BMC in June 2026 for phase one of a 350 tonne per day CBG plant at Mankhurd, fed by hotel, market and kitchen waste, with MGL putting the gas into a network that already serves over 1.65 million domestic PNG customers.

Sources

• PPAC, Gas Price notifications
• ChiniMandi, Demystifying the CBG blending mandate
• PSU Watch, Petroleum ministry issues guidelines for Rs 23,731-cr GOBARdhan scheme for CBG
• Down To Earth, Union Budget 2026: excise duty exemption boosts biogas blending
• Renewable Watch, GAIL, GBA and BSWML ink agreement for CBG plant in Bengaluru
• Renewable Watch, MGL and BMC ink agreement for 350 TPD CBG plant in Mumbai
• GAIL, press releases