India Weighs New Charges on Cooking Gas Consumers to Fund $42 Billion Fuel Reserve

India's government is considering imposing new charges on cooking and natural gas consumers to fund a planned $42 billion strategic fuel reserve. The plan, which has yet to be approved by the Prime Minister's Cabinet, aims to create stockpiles that can cover about two months of crude and liquefied natural gas demand, and around six weeks of liquefied petroleum gas consumption.

The decade-long plan comes amid recent supply disruptions caused by the Middle East crisis. India relies heavily on foreign fuel imports, making it vulnerable to supply chain disruptions through the Strait of Hormuz. The government has seen a hike in import costs and highlighted India's continued dependence on imported fuel.

Under the proposed plan, authorities anticipate raising about $1.5 billion for cooking and natural gas storage infrastructure through levies on users. For LPG, a levy of Rs 1.29 per kg is under consideration by the Ministry of Petroleum and Natural Gas. This could potentially raise around $460 million annually for infrastructure development.

However, the exact metrics for collecting these levies have not been ironed out yet. The proceeds would primarily fund natural and cooking gas storage infrastructure, while crude reserves and strategic fuel inventories would continue to be financed by the federal government.