How to Get an LOI Under the SATAT Scheme: Step-by-Step Guide
The SATAT (Sustainable Alternative Towards Affordable Transportation) scheme, launched by the Government of India, is a significant initiative aimed at promoting Compressed Biogas (CBG) as an alternative fuel for vehicles, reducing dependency on fossil fuels, and supporting a greener, more sustainable future. Under this scheme, private companies, cooperatives, and public sector undertakings are encouraged to set up CBG plants to produce Bio-CNG.
If you are looking to start a CBG plant under the SATAT Scheme, getting an LOI (Letter of Intent) from the Oil Marketing Companies (OMCs) such as Indian Oil Corporation Limited (IOCL), Hindustan Petroleum (HPCL), and Bharat Petroleum (BPCL) is the first crucial step. This LOI guarantees the off-take of the Bio-CNG produced at a pre-determined price, ensuring the financial viability of your project.
In this step-by-step guide, we’ll walk you through how to get an LOI under the SATAT Scheme, ensuring a smooth and successful application process.
1. What is the SATAT Scheme?
Before diving into the process, let's briefly understand what SATAT is.
Launched in 2018, the SATAT scheme aims to:
Promote CBG as a clean alternative fuel for vehicles, reducing pollution and reliance on conventional fossil fuels.
Enable waste-to-energy generation using agricultural, municipal, and industrial waste.
Create a market for Bio-CNG by connecting producers with OMCs for consistent offtake agreements.
Offer financial support, incentives, and subsidies to CBG plant owners.
The goal is to set up over 5,000 CBG plants across the country by 2030, reducing India’s dependence on imported fossil fuels.
2. Why Do You Need an LOI?
An LOI from an OMC ensures that your Bio-CNG production will be bought at a guaranteed price for a specific duration. Without the LOI, the risk of fluctuating prices and demand is high, making it difficult to secure financing for the project.
OMC Buyback Price for CBG under SATAT:
The OMCs will purchase CBG at a price of ₹62–₹72 per kg (depending on factors like location and calorific value). This price is fixed for an initial 5 years with the potential for extension.
3. Eligibility Criteria for Getting an LOI Under SATAT
Before applying for the LOI, ensure you meet the following eligibility criteria:
Legal Entity: You must be a legally registered entity, such as:
A private company
A partnership firm
A cooperative society
A government body or PSU (Public Sector Undertaking)
Feedstock Availability: You must have access to suitable feedstock for CBG production. This could be agricultural residue (e.g., Napier grass), cow dung, food waste, or municipal solid waste.
Infrastructure Readiness: Your facility must meet the basic infrastructure requirements for establishing a Bio-CNG plant. This includes land, machinery, gas purification units, and compliance with environmental standards.
Financial Stability: You need to have access to sufficient capital or financing for the establishment and operation of the CBG plant. You may also be required to submit a bank guarantee or proof of funding during the application process.
4. Step-by-Step Process to Get an LOI Under the SATAT Scheme
Here’s a detailed guide on how to get an LOI under the SATAT scheme.
Step 1: Understand the Requirements
Research the Scheme: Start by thoroughly reviewing the SATAT scheme’s guidelines. The Ministry of Petroleum & Natural Gas (MoPNG) regularly updates the scheme’s terms and conditions, including technical, environmental, and financial criteria.
Visit the Official Website: Go to the official SATAT portal (www.satat.gov.in) for the latest updates and notifications.
Step 2: Gather Necessary Documents
You’ll need to prepare and submit the following documents for the LOI application:
Company Registration Details: Proof of legal entity (company/firm).
Feedstock Agreement: Proof that you have secured a reliable feedstock supply for your plant.
Land Availability: Title deed or agreement showing that you have land for the CBG plant.
Financial Documents: Financial statements, project financing plans, or bank guarantees showing that you have the necessary capital.
Environmental Compliance: Approval from local authorities for the establishment of the plant (Environmental Clearance, NOC from Pollution Control Boards, etc.).
Step 3: Apply for the LOI Online
Once you’ve gathered the necessary documents, follow these steps:
Register on the SATAT Portal: Create an account on the SATAT portal to begin your application process.
Fill in the Application Form: Provide all relevant details, such as:
Project capacity (2.5 TPD, 5 TPD, 10 TPD, etc.)
Location of the plant
Type of feedstock you plan to use
Financial details (including funding sources and bank guarantees)
Submit the Application: After filling in the application form and uploading the necessary documents, submit your application for review.
Step 4: Evaluation of Application
After submission, your application will be reviewed by OMCs (IOCL, BPCL, HPCL), who will evaluate:
Project Feasibility: The technical feasibility of your proposed CBG plant, including the feedstock, capacity, and infrastructure.
Financial Viability: The financial soundness of your project, including funding sources and repayment capacity.
Environmental Compliance: The environmental impact of the plant and its adherence to regulations.
Step 5: Receive the LOI
If your application is approved, you will receive an LOI (Letter of Intent) from one or more OMCs. This LOI guarantees that your Bio-CNG will be purchased at a pre-determined price for 5 years or more.
Step 6: Finalise the Off-Take Agreement
Upon receiving the LOI, you will proceed to negotiate and finalise the off-take agreement with the OMC. This agreement will include:
Price per kilogram of CBG
Delivery schedules
Quality specifications (calorific value, purity)
Penalty clauses for non-compliance
Step 7: Secure Financing and Set Up the Plant
Once you have the LOI and the off-take agreement, the next steps are to secure financing for the plant and begin its construction.
Approach banks, NBFCs, and government schemes for financing options.
Finalise the construction plan, procure equipment, and begin the setup of the plant.
5. Common Challenges in Getting an LOI Under SATAT
While the process seems straightforward, here are some common hurdles to be aware of:
Feedstock Supply Issues: Securing a reliable and cost-effective feedstock supply can be challenging, especially in urban areas.
Compliance Delays: Environmental clearances and other regulatory approvals can take time.
Financing: Getting sufficient funding for a CBG plant is often the biggest barrier, especially for smaller companies or startups.
Long Approval Time: The approval process can sometimes take months, depending on the completeness of your application and project evaluation.
6. Conclusion
The SATAT scheme is a golden opportunity for businesses interested in producing Bio-CNG and contributing to India’s green fuel revolution. By securing an LOI, you ensure a stable revenue stream from the OMCs for your Bio-CNG plant, giving you the confidence to move forward with construction and operations.
By following this step-by-step guide and meeting all the necessary eligibility criteria, you can position yourself for success in the growing CBG sector. For expert assistance, including detailed feasibility reports, financing options, and equipment procurement, Biofics Pvt. Ltd. can help you build and operate efficient, high-performance Bio-CNG plants across India.
Want to know more or need expert guidance on setting up your CBG plant under the SATAT scheme?Contact Biofics Pvt. Ltd. today for a consultation.
