Getting a CBG Plant LOI Under SATAT — the Complete OMC Buy-Back Process

CBG or compressed bio-gas (bio-CNG) is the biomass sector’s biggest-capital door — a plant of crores of rupees, but the government itself guarantees the buyer: the oil marketing companies (OMCs — IOCL, BPCL, HPCL) will buy the gas on a 15-year contract, and blending CBG into CNG/PNG is now a mandatory target (1% in FY 2025-26, 5% by FY 2028-29). In this guide I show the whole process of bringing in a Letter of Intent (LOI) from the OMCs — from eligibility to the commercial agreement.

In brief: the route is — build the DPR → unified registration number on the GOBARdhan portal → EOI on the chosen OMC’s portal → technical evaluation (30–60 days) → LOI → bank guarantee → 15-year commercial agreement. Rules and fees are revised, so the last word is always the current guidelines on the SATAT portal.

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1. Understand the business model: two streams of income

A CBG plant’s income isn’t a single stream:

Income stream	Source	Market
Purified methane (CBG)	Cascade delivery to the OMC (compressed to 250 bar)	SATAT/long-term contract — price linked to CNG, revised per notification
Digestate	The mud left after digestion → organic fertiliser (FOM/LFOM)	Fertiliser companies, farming — a separate income head

So along with selling gas, an organic-fertiliser market opens up too — add this ‘dual revenue’ and the project’s ROI math stands. Prices are revised over time, so don’t tie your plan to figures like ‘assured ₹45–55/kg’; calculate on the latest OMC notification.

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2. Eligibility: who can apply

• Eligible entities: individual entrepreneur, proprietorship, partnership, LLP, private/public limited, FPO, sugar mill, even a municipality.
• Capacity: a proposed minimum of 2 TPD for commercial viability; the OMC also considers smaller proposals (about 1 TPD) based on logistics.
• Feedstock: assured supply within a 25 km radius by ownership or written MoU — farm dung, poultry waste, straw, press mud, municipal waste.
• Land: registered ownership or a long-term lease — about two acres for an approximate 5 TPD plant.
• Financial capacity: demonstrable net worth per capacity (see the scheme’s current slabs on the portal).

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3. Step by step: from DPR to LOI

Step 1 — DPR (Detailed Project Report): before entering any portal you need a technically strong DPR — feedstock sources and MoUs, digestion technology (wet/dry fermentation), capex breakdown, daily CBG production projections, environmental-compliance plan.

Step 2 — GOBARdhan registration: obtain the unified registration number on the GOBARdhan portal — this number is the prerequisite for the SATAT application.

Step 3 — EOI submission: apply on the chosen OMC’s e-tender/EOI portal — DPR, GOBARdhan number, land deeds, feedstock MoUs, audited financials, net-worth certificate from a CA.

Step 4 — Technical evaluation: the OMC committee scores technical feasibility, distance to the grid/outlet, and the cascade delivery route (250-bar compressed delivery within 25 km of the plant) — usually 30–60 days.

Step 5 — LOI and bank guarantee: cross the prescribed score and you get the LOI; to accept it, submit a bank guarantee within the stipulated months — about ₹5 lakh for a new plant, less for upgrading an old biogas plant. (See the exact figure in the current guidelines.)

Step 6 — Commercial agreement and finance: right after the bank guarantee comes the long-term commercial agreement with the OMC — this agreement is what forms the basis of priority-sector lending at the bank; the subsidy application comes after. (Read the subsidy math in the CBG subsidy guide.)

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4. A reality note: the gap between the LOI and selling gas

SATAT’s target was 5,000 plants, yet only about a hundred-odd were commissioned by 2025 — many LOI-holding plants never reached the field. Three reasons: long-term feedstock security, financial closure, and the delivery route. So instead of thinking ‘once we get the LOI, it’s done’, reverse it — tighten the feedstock MoUs and the bank talks first, then run for the LOI.

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5. Frequently Asked Questions (FAQ)

1. What is the LOI’s validity?

Usually valid subject to showing plant progress within a set time (a few stages counted in months) — the validity and continuation rules are in the committee’s letter itself. Fail to show progress and the LOI can be cancelled and the bank guarantee encashed.

2. I’m doing business for the first time — will turnover be looked at?

New entrepreneurs face no minimum-turnover condition, but net worth, land and feedstock security are examined. And preparing bank finance according to the project’s size is the real test.

3. Can CBG be made from municipal waste?

Yes — the organic fraction of municipal solid waste is a SATAT-eligible feedstock; quite a few CBG projects stand on municipal MoUs. But you must account for the waste’s collection-segregation cost.

4. Is a CBG plant riskier than a pellet plant?

Yes — capex is more than 10 times as high, and the timeline is counted in years. If you want to enter the industry with small capital, first see the pellet plant’s ROI math; CBG is the next league.

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6. Beware of Fraud

🛡️ ‘SATAT connections’, ‘LOI guarantee’, ‘arranging the OMC officer’ — pay money on these words and you will be defrauded. The LOI comes only through the EOI process on the OMC’s open portal; the fee of a reputable consultant for DPR preparation is a different matter, but an ‘approval guaranteed’ trade simply does not exist. If defrauded, call the 1930 helpline or complain at cybercrime.gov.in.

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Related guides: the subsidy math and GOBARdhan/BioURJA application — MNRE subsidy guide for CBG plants; land, machinery and consents — CBG Plant Cost & Compliance; the small-capital route — the 1 TPH pellet plant’s ROI.