India Eyes Gas Levies to Fund $42 Billion Fuel Reserve Plan

India's government is considering a plan to fund its $42 billion strategic fuel reserve program by imposing levies on liquefied petroleum gas (LPG) and natural gas consumption. The proposal aims to raise around $1.5 billion annually through a levy of 1.29 rupees ($0.0136) per kilogram of LPG, expected to generate roughly $460 million a year, and another of 1.43 rupees per standard cubic meter of natural gas, raising about $1 billion annually at current consumption levels.

The new plan would create dedicated emergency stockpiles for LNG and LPG alongside additional crude oil storage, with the proceeds from the proposed levies primarily funding LNG and LPG storage facilities. The existing strategic petroleum reserve system would continue to be financed directly by the federal government.

The proposal remains under discussion across multiple ministries and has not yet received cabinet approval. If adopted, the levies would increase household gas bills by about 2%, making the proposal politically sensitive for Prime Minister Narendra Modi's government.