SATAT Initiative

On 1st October 2018, the Union Minister of Petroleum and Natural Gas launched the SATAT (Sustainable Alternative Towards Affordable Transportation) scheme in association with Public Sector Undertaking (PSU) Oil Marketing Companies (OMCs), i.e. Bharat Petroleum Corporation Ltd.,  Indian Oil Corporation Ltd. and Hindustan Petroleum Corporation Ltd.

The SATAT scheme aims at setting up Compressed Bio-Gas (CBG) production plants and making them available in the market for usage as green fuels in automotive fuels by inviting the Expression of Interest (EOI) from entrepreneurs. This scheme will help vehicle users, farmers and entrepreneurs.

The SATAT initiative is funded under the Solid and Liquid Waste Management (SLWM) component of Swachh Bharat Mission-Gramin (SBM-G) through Gram Panchayats to benefit households in the selected villages.

What is Compressed Bio-Gas (CBG)?

Bio-gas is produced naturally through an anaerobic decomposition process from bio-mass/waste sources like cattle dung, agriculture residue, municipal solid waste, sugarcane press mud, sewage treatment plant waste, etc.

After purification, it is compressed and known as CBG. The CBG has over 95% pure methane content. It is similar to commercially available natural gas in its energy potential and composition. It can be used as a renewable and alternative automotive fuel. It has the potential to replace CNG in industrial, automotive and commercial uses in the coming years due to the abundance of biomass in the country. 

Benefits of SATAT Initiatives

There are many benefits of the SATAT scheme, which are as follows:

• The SATAT initiative would meet the energy demand in an eco-friendly and responsible manner by producing CBG from waste and contributing to India’s commitment towards GHG emission reduction.
• This scheme enables better use of cattle dung, agricultural residue and municipal solid waste.
• It offers an effective solution for the disposal and treatment of municipal solid waste management and helps to tackle the problem of air pollution due to farm stubble burning.
• It will boost the rural economy, entrepreneurship, and employment and provide additional sources of revenue to farmers.
• It will help to reduce the nation’s dependence on crude oil and natural gas imports and act as a buffer against gas and crude oil price fluctuations.
• The decentralised system provides an opportunity to supply CBG in remote areas and locations where access and affordability to modern energy are still challenging.
• The CBG produced can be integrated with gas networks, such as City Gas Distribution (CGD) networks, to boost supply to retail and domestic users in upcoming and existing markets.
• Integration with the existing gas network will ensure optimised access and effective distribution of cleaner and affordable fuel.

Application Process of SATAT Scheme

Expression Of Interest (EOI)

Under the SATAT, the Expression of Interest (EOI) for the supply and production of the Compressed Bio-Gas (CBG) will be floated every month. Entrepreneurs can submit their EOIs on the IndianOil e-Tendering portal by searching ‘CBG’ in the tender search box. Similarly, entrepreneurs can also submit their EOI on the BPCL website and HPCL website. 

For individual applicants, the applicants should be at least 21 years. In other cases, the applicants should be:

• Indian nationality or a company registered in India. 
• Non-Resident Indians (NRIs)/Persons of Indian Origin (PIO) or a Multi-National Company (MNC) having its registered office in India. 
• Overseas Corporate Bodies having a registered office in India.

Letter of Intent

The EOI submission is evaluated on a predefined set of parameters. The respective oil and gas company issues the Letter of Intent (LOI) to applicants when their EOIs qualify.

Retail Outlet Selection and Readiness

After the applicants accept the Letter of Intent (LOI), they should submit a bank guarantee for safeguarding OMC investments towards retailing of the CBG. The bank guarantee amount for the applicants is as follows:

• Applicants having an existing plant producing bio-gas or CBG must give a bank guarantee of Rs.1 lakh per CBG plant within one month after issuance of the LOI.
• New applicants who are yet to set up plants must give a bank guarantee of Rs.5 lakh per CBG plant within one month after issuing the LOI.

Upon submission of the bank guarantee, the respective state office will be intimated about the LOI holder, depending upon the CBG plant location. The retail outlet will be finalised with mutual consent between the concerned office and the LOI holder. The number of allocated retail outlets depends upon the proposed CBG production capacity, and the location of retail outlets depends on the proposed CBG plant location.

Signing Commercial Agreement

After allocating a retail outlet, a commercial agreement is executed between the LOI holder and the oil and gas company. The commercial agreement includes initial production capacity, plant location, retail outlet allocated and details of the pricing model.

Sale of CBG 

The retail outlet infrastructure development is planned based on the estimated date of commissioning of the CBG Plant. Once the CBG plant is commissioned, CBG will be supplied by the LOI holder to the allocated retail outlets through cascades, and the sale of CBG is commenced.

Implementation of the SATAT Scheme

Under the SATAT scheme, entrepreneurs will set up a CBG plant. They will produce and supply CBG to OMCs for sale as industrial and automotive fuels. The PSU OMCs invite EOI from potential entrepreneurs to set up the CBG plants under the scheme. 

The CBG plant owner will be responsible for the preparation, planning, execution and engineering of the project, including operation and maintenance of the plant, storage of raw material, quality and managing the by-products, maintaining final product output quantity and wastes from the plant as per the existing central and state norms.

The CBG produced at the CBG plants will be transported through cylinder cascades to the allocated retail outlets (fuel station networks of OMCs) for marketing as a green transport fuel alternative. Around 1,500 strong CNG stations across the country serve about 32 lakh gas-based vehicles.

The entrepreneurs can separately market the other by-products from the CBG plants, including carbon dioxide, bio-manure, etc., to enhance returns on investment. The SATAT scheme plans to set up 5,000 CBG plants across the country in a phased manner. It aims to set up 250 CBG plants by 2020, 1,000 CBG plants by 2022 and 5,000 CBG plants by 2025. 

There is an expectation that these plants will produce 15 million tonnes of CBG every year, about 40% of the current CNG consumption of 44 million tonnes per annum. It is expected to generate direct employment for about 75,000 people and produce around 50 million tonnes of bio-manure for crops at an investment of approx Rs.1.7 lakh crore.

Government Scheme Supporting SATAT Initiatives

The National Policy on Biofuels 2018 emphasises the promotion of advanced bio-fuels (including CBG). The government launched the GOBAR-DHAN (Galvanising Organic Bio-Agro Resources) scheme to convert solid waste and cattle dung in farms to compost and CBG. The Ministry of New and Renewable Energy notified Central Financial Assistance (CFA) of Rs.4 crore for 4,800 kg of CBG generated from 12,000 cubic metres of biogas per day, subject to a maximum of Rs.10 crore for each project.

The Reserve Bank of India (RBI) has categorised CBG plants in the priority sector for lending to finance CBG projects. The State Bank of India (SBI) has launched a specific policy for financing CBG projects, and other banks are also adopting similar policies to finance CBG.

The Ministry of Agriculture has included CBG plants in Fertiliser Control Order to promote organic farming in India and increase revenue from the sale of CBG plant’s bi-products, such as fermented organic manure, thus facilitating organic manure marketing throughout India.

In addition to the government’s efforts, individual states also promote CBG initiatives. Punjab, Haryana, Uttar Pradesh and many other states have formed a state-level committee to monitor and implement the SATAT Scheme.