India's Proposed Strategic Fuel Reserve (Economy)
India's Proposed Strategic Fuel Reserve (Economy)
Why In News:
India is considering a levy on cooking gas and natural gas consumers to help finance a proposed $42 billion strategic fuel reserve programme, after supply disruptions linked to the recent Iran conflict exposed vulnerabilities in the country's energy import chain.
Source: The Hindu, Page 13, 6 August 2026, 'India said to mull levy on gas users to fund $42-bn fuel reserve'
Key Facts
Programme size: The strategic reserve programme is planned over 10 years and would require about $42 billion, with more than half going toward storage infrastructure and the rest toward stocking the reserves.
Scope expansion: For the first time, India's strategic reserves would extend beyond crude oil to include liquefied natural gas (LNG) and liquefied petroleum gas (LPG).
Coverage target: The planned stockpiles are meant to cover about two months of crude oil and LNG demand, and around six weeks of LPG consumption.
Why This Matters
Import dependence: India meets close to 90% of its crude oil needs through imports, along with a significant share of its LNG and LPG requirements, making it vulnerable to global supply shocks.
Trigger event: Disruptions during the recent Iran related conflict and uncertainty around the Strait of Hormuz underscored the risks of this import dependence.
Comparative reserves: India's existing emergency fuel reserves cover less than 10 days of demand, compared with roughly 100 days maintained by countries such as Japan and South Korea.
Related Concepts for Prelims
Strategic Petroleum Reserve (SPR): These are managed by Indian Strategic Petroleum Reserve Limited, a special purpose vehicle and wholly owned subsidiary of the Oil Industry Development Board.
India has three underground storage facilities:
Visakhapatnam (Andhra Pradesh)- 1.33 million tonnes
Mangaluru (Karnataka)- 1.50 million tonnes
Padur (Karnataka)- 2.50 million tonnes
The total storage capacity stands at 5.33 million tonnes.
When fully filled, these reserves can meet about 9.5 days of India’s crude oil requirement, serving as a buffer against supply disruptions.