India Mulls Levies on LPG and Natural Gas Users to Fund Strategic Reserves

India is considering imposing levies on users of liquefied petroleum gas (LPG) and natural gas to help fund its planned $42 billion multi-fuel strategic reserve program. The move aims to address supply chain vulnerabilities exposed by recent disruptions in the Middle East, particularly with regards to Iran.

The proposed levies would be used to finance storage infrastructure for LPG and natural gas, as well as crude oil reserves. According to sources, a levy of 1.29 Indian rupees ($0.0136) per kg of LPG could raise about $460 million annually, while a levy of 1.43 rupees per standard cubic meter of natural gas could generate around $1 billion annually.

The additional costs would add about 2% to household gas bills, making it a politically sensitive move for the government. The Ministry of Petroleum and Natural Gas is considering the plan, which was drawn up after supply disruptions highlighted India's dependence on imported fuel.