India Plans to Charge Gas Users for Strategic Fuel Reserves
India is planning to charge consumers of liquefied petroleum gas (LPG) and natural gas to fund the development of its first comprehensive multi-fuel strategic energy reserve. The reserve will include stockpiles of crude oil, liquefied natural gas (LNG), and LPG that can meet nearly two months of India's crude oil and LNG demand, as well as approximately six weeks of LPG consumption.
The proposed plan aims to strengthen India's energy security and ensure uninterrupted fuel supplies during periods of geopolitical instability or global supply disruptions. To finance the project, a small levy on LPG and natural gas consumption is expected to generate around $1.5 billion annually. The Ministry of Petroleum and Natural Gas has proposed introducing a 1.29 Indian rupees per kilogram levy on LPG, which could contribute nearly $460 million each year.
The additional revenue will be used to develop strategic storage infrastructure for crude oil, LNG, and LPG. The proposal gained momentum after the Middle East conflict disrupted global energy markets and highlighted India's vulnerability to geopolitical events. Currently, India has no dedicated strategic reserves for LPG or LNG, creating a gap in its emergency energy preparedness.