India Considers Cooking Gas Levy to Fund $42 Billion Strategic Fuel Reserve

The Indian government is considering introducing a consumer levy on liquefied petroleum gas (LPG) and natural gas to fund a $42 billion strategic fuel reserve aimed at strengthening energy security. The proposal, which still requires Cabinet approval, would see LPG consumers charged Rs 1.29 ($0.0136) per kilogram, generating around $460 million annually.

The levy on natural gas would be Rs 1.43 per standard cubic meter, producing approximately $1 billion at current consumption levels. The combined levies would raise about $1.5 billion annually to fund gas storage infrastructure, adding around 2% to household gas bills.

India's decade-long programme aims to build strategic reserves for LNG and LPG alongside crude oil, targeting additional storage for 28 million tonnes of crude, 9 million tonnes of LNG, and 4 million tonnes of LPG. The plan was prompted by supply disruptions during the US-Israel-Iran conflict, which exposed India's vulnerability as it imports nearly 90% of its crude oil.