Compressed Biogas Plant Setup in India: License, Cost & Process Guide

Introduction

 Compressed Biogas Plant Setup in India: A Complete Guide to License, Process, Cost and Compliance

India generates huge quantities of agriculture residues, municipal solid wastes, and cow dung on a daily basis. All this waste when converted to generate pipeline quality fuel serves two purposes; one, to solve the issue of waste management, and second, to ensure an alternative supply of energy security. Compressed Biogas manufacturing Plant project in India is being increasingly favou+red by business organizations in recent times.

CBG comes with the added advantage of having a structured government scheme, offtake guarantee from the oil marketing companies, and a subsidy structure that makes real improvements to project economics. It requires a lot of things including land acquisition, sourcing of raw material, numerous statutory clearances, and paperwork before the first cubic meter of fuel is generated for compression. This guide talks about all these things, starting from the licensing process until operating compliance post the plant setup.

The requirements for setting up a CBG plant in India include Business Registration and GST Number; Environmental Clearance from State Pollution Control Board; Explosive Safety License from PESO for Gas Storage; Fire Safety NOC; Clearances for Building and Factory from Municipal Corporation; and Letter of Intent from Oil Marketing Company as per SATAT.

Advantages of Setting Up of Compressed Biogas Plant

Off take guaranteed through long-term contracts. Commercial contracts for a period of ten to fifteen years are entered into by the oil marketing companies like IOCL, BPCL and HPCL after setting up the plant. In case of a capital-intensive project like this, assurance of demand for over a decade removes majority of risks faced in a start-up project.

Financial assistance and subsidy from Centre. Ministry of New and Renewable Energy provides financial assistance from Centre under National Bioenergy Programmes and there is availability of subsidy for biomass collection machinery. Both play a major role in bringing down the investment cost for the promoter.

Status as Priority Sector Lending Scheme. CBG plants being part of Priority Sector Lending Scheme of RBI makes it easier to get finance from banks and non-banking financial companies.

Second source of income. Digestate obtained after extraction of biogas can be used for manufacturing of Fermented Organic Manure, which has its own market among farmers who use it as an alternative to chemical fertilizers. Manufacture of this product serves as a second income source for the plant owners.

Consequences for environmental and economic situation in rural areas. Along with economic benefits of running CBG plants, such plants eliminate agricultural waste that was previously either burned or decomposed and caused air pollution due to stubble burning. Further, CBG plants provide employment in the areas of feedstock collection, transportation, and running the plant itself, something that is quite relevant in rural and semi-urban areas.

Eligibility to Set Up a Compressed Biogas Plant

The SATAT policy framework, along with the related state level biofuel and bio-energy policies, appears quite inclusive regarding the list of applicants who could participate. The list of eligible applicant groups usually comprises:

1. Single individuals
2. Partnerships and LLPs
3. Private and public limited companies
4. Farmer Producer Organizations (FPOs)
5. Organizations registered as cooperatives
6. Municipal bodies and authorized private concessionaires, especially when dealing with municipal solid waste plants.

Nevertheless, the legal format of the entity in question constitutes only a smaller part of the eligibility requirements. What OMCs and financial institutions pay more attention to is whether the applicant owns the land or has a long-term lease of it, whether it possesses a legitimate supply chain of feedstock materials, and whether it has enough financial stability to implement the DPR. An application which is legally qualified but cannot prove its capability of a regular supply of feedstock material will have little chance to be considered by an OMC.

Documents Required for Compressed Biogas Plant License

All parties involved in the approval chain, including the Pollution Control Board, PESO, municipal corporation, and even the OMC, will require overlapping paperwork and thus, having such documents available in one pack would be helpful in saving time. The documents that are generally required can be summarized as follows:

1.         Certificate of Incorporation and the PAN of the company seeking permission

2.         Land ownership or lease deed documentation in case of long-term usage

3.         Project Report (DPR) related to technology, sourcing of feedstock, capacity, and finances

4.         BOD Resolution for appointing an authorized person who will handle all the documentation and agreement procedures on behalf of the company

5.         EIA report, if at all required due to size and location of the project

6.         Financial Statements of the firm or the sanction letter from the bank in case of the funding of the project

7.         Agreement with farmers' cooperative organizations, mandis, agro-processing units, or urban bodies in case of availability of feedstock

Of them all, the DPR deserves special attention. This is not merely an administrative issue during the application process, but the document with which MNRE evaluates the subsidy applications, with which the bank assesses the project, and upon which the OMC relies heavily while evaluating the Letter of Intent. A bad or generic DPR can be problematic during each of these subsequent steps; therefore, one needs to develop a specially tailored DPR for a particular site and technology.

Compressed Biogas Manufacturing Process and Project Setup

1. Collection and pre-processing of the raw material. Pre-processing of the raw material like paddy straw, press mud, cow dung or sorted MSW followed by removal of all possible contamination in terms of plastic, metal or any other object that could hamper the subsequent processing stages.
2. Anaerobic Digestion. The raw material after pre-processing is put into the anaerobic digesters where bacteria degrade the raw material in several weeks under the absence of air giving biogas containing methane and other impurities such as CO2.
3. Biogas upgrading and purification. Then, raw biogas is sent to the gas purification facility where the impurities like CO2, hydrogen sulphide and moisture are separated so that the methane content becomes equal to CNG.
4. Compression and storage. Then, the gas is compressed and stored in cascades to either be delivered to the city through roads in cylinders or be fed into the city gas distribution system using CBG-CGD synchronization by GAIL.
5. Processing of digestate. The slurry produced during the digestion stage is dried up to obtain Fermented Organic Manure and sold separately.

Process of Setting Up a Compressed Biogas Plant

1. Feasibility study and site identification considering factors such as availability of the feedstock, location near CGD network or highway for transporting cylinders, water availability, and land cost.
2. Preparation of DPR including technology, capacity, logistics, and financials for the entire project.
3. Submission to the OMC of their Expression of Interest and receipt of Letter of Intent through SATAT.
4. Obtaining of statutory clearances simultaneously i.e. PCB consent, PESO explosive safety license, fire NOC and building/factory plan clearance.
5. Financial closing utilizing MNRE subsidies, promoters' equity and Priority Sector Lending.
6. Building work, installation of equipment and commissioning, including trials to verify the quality of gas prior to its commercial delivery.
7. Execution of the commercial delivery agreement and commencement of gas dispatches to OMC.

Documentation regarding land and feedstock is truly necessary to be finalized before LOI stage – OMC does quite an exhaustive evaluation of the project feasibility before signing a fifteen-year contract and missing documentation is one of the most frequent grounds for application delays.

Government Authority Involved

CBG Plant License in India can be granted through approval from multiple authorities, each dealing with one component of the entire project:

1. MoPNG manages the SATAT scheme and the OMC procurement system that forms the basis of the offtake agreements.
2. MNRE controls the Central Financial Assistance allotted under the National Bioenergy Programme.
3. The State/ Central Pollution Control Board gives the Consent to Establish and Consent to Operate because the plant processes organic waste and produces emissions.
4. The explosive safety license for compressed gas storage and transport is provided by PESO (Petroleum and Explosives Safety Organisation).
5. The local Municipality Corporation/Urban Local Body clears the construction plan and, for the plants based on municipal solid waste, arranges for the tipping fee.
6. The State Fire Department provides the NOC for fire safety before commissioning the plant.
7. The GAIL Company implements the pipeline injection for connection with the city gas distribution network through the Synchronisation Scheme.

Having to coordinate with so many authorities simultaneously can be said to be the largest operational challenge in CBG projects; this is precisely the reason why sequencing and simultaneous processing of application is essential.

Timeline Of Compressed Biogas Plant Setup

It must be stated outright that the process of going from feasibility studies to the stage of commissioning will take any time between 12 and 24 months. The small-scale plants, which have simpler feedstock needs, will be closer to the shorter end of this range, while bigger plants depending on municipal talks and other difficult clearances will be closer to the other end of the spectrum. The statutory clearances of PCB consent and PESO license both take around a few months, and generally those projects which do not delay the application process till financial closure and DPR completion find themselves on schedule.

Fees Of Compressed Biogas Plant Setup

It makes sense to separate government fees from the total capital expenditure of the project. The statutory fees that are related to licensing and other approvals consist of the following:

1. Pollution Control Board fees for Consent to Establish and Consent to Operate. These vary from one state to another and are usually tied to the capital investment or category of the factory
2. PESO licence fees for the storage and handling of explosives
3. Municipal fees for the approval of building plans and factory registration
4. Processing fees charged by the State Fire Department for NOC

These fees may not be individually significant in terms of the total capital expenditure of the project, but they have to be accounted for in the working capital requirement, because any delay in paying such fees will stall the whole process of licensing.

Compliance Requirements

The completion of the plant licensing and commissioning is merely one half of the story – the compliance process ensures that the plant is able to run seamlessly. A CBG plant, once operational, will have to:

1. Ensure that the quality of gas remains in accordance with BIS/IS 16087 for all batches supplied to the OMC
2. Conduct environmental monitoring and submit reports to the State Pollution Control Board
3. Ensure renewal of the PESO licence along with adherence to explosive safety norms in everyday activities
4. Send annual statutory returns for the business entity along with sector specific returns
5. Send off production numbers to the OMC as per the agreement

Penalties for non-compliance

In contrast, the repercussions for not adhering to standards in this industry go far beyond just receiving a written warning. The gas, which does not meet the specified standards in terms of quality, may simply not be accepted by the OMC, and failure on this front more than once may lead to negotiations regarding, and possibly cancellation of, the offtake agreement that serves as the financial crux of the project. The absence of license of PCB or valid PESO license means that the company will be informed about the closure of their project in addition to the penalties, and might also lead to a criminal case as per Explosives Act.

Reasons to go for CorpZo

Setup of Compressed Biogas Plant Project requires a balance of numerous regulatory authorities such as pollution control board, PESO, municipal corporation, and OMCs, etc. At CorpZo, our experienced team has always been dealing with such situations where issues of law of corporations, environmental law, and special licensing have converged. It doesn’t matter whether you want to incorporate the firm seeking the license, prepare a DPR as per the OMC guidelines, obtain parallel clearances, or submit SATAT application, CorpZo ensures that entrepreneurs progress through the process without getting into the loop of back-and-forth communications.

Frequently Asked Questions - CorpZo

1. Is there any single or composite license for the Compressed Biogas Plant in India?

No, it's not a single license. Rather it's a combined licensing requirement including Pollution Control Board approval, PESO license, fire NOC, municipal building clearance, and the OMC Letter of Intent under SATAT, instead of a composite license.

2. How can I get a Compressed Biogas Plant license in India?

It's a process of conducting the feasibility study & DPR and then responding to the OMC's Expression of Interest to get LOI and completing statutory clearances of PCB, PESO, fire & building clearance simultaneously before finance and construction.

3. Who gives Letter of Intent for CBG offtake?

OMCs, which include IOCL, BPCL, and HPCL, give the LOI in response to EOI sent to them under SATAT.

4. What is the approximate cost of Compressed Biogas Plant in India?

The cost varies according to capacity and technology but in general, a plant having a daily feedstock capacity of 2 to 5 tonnes requires an investment in crores of rupees even after considering the subsidies offered by the central government.

5. Is it an application that individuals can make, or must it be made by registered companies?

Individuals, partnerships, LLPs, private and public limited companies, FPOs and cooperative societies are all eligible as long as they have proof of access to land, feedstock and finances.

6. How long does it take for the entire installation to get sorted out?

On average about 12 to 24 months starting with the feasibility study until the commissioning of the installation, depending on the size of the plant and the speed with which the approvals and feedstocks are secured.

7. Which documents carry more weight in the whole approval process?

Detailed Project Report carries the most weight, as it forms the basis for subsidies, lender’s due diligence and OMC's viability check.

Get Started with CorpZo

If you are considering an assessment of a Compressed Biogas Plant Installation project in India and need professionals that will help you take care of the licensing, documentation, and coordination with authorities for you, then you should definitely consider turning to CorpZo’s compliance specialists, who will be able to take care of all formalities from start to finish. Contact CorpZo now!