$42 Billion Fuel Reserve: India to Charge Gas Consumers Amid Supply Chain Vulnerabilities

India's government is considering imposing a charge on cooking gas and natural gas consumers to help fund its planned $42 billion strategic fuel reserve. The reserve, aimed at reducing the country's dependence on imported fuel, would extend India's strategic reserves beyond crude oil for the first time.

The plan includes stockpiles designed to cover about two months of crude and liquefied natural gas demand, and around six weeks of liquefied petroleum gas consumption. To finance the reserve, cooking and natural gas storage infrastructure would be financed through levies on users that could raise about $1.5 billion annually.

For LPG, a levy of 1.29 Indian rupees ($0.0136) per kg has been proposed, which would raise about $460 million a year based on current consumption levels and add about 18 rupees to the cost of a standard domestic cooking gas cylinder. For natural gas, a levy of 1.43 rupees per standard cubic metre has also been proposed, generating about $1 billion annually at current consumption levels.

The proposed levies would add about 2% to household gas bills and are expected to raise the costs for millions of consumers amid elevated fuel prices. The funding mechanism, including the proposed levies on cooking and natural gas consumption, has not previously been reported.