The Hindu Business Line : Kerosene rates soar in Mumbai on shortage fears

MOHAMMED Sabir Sheikh is a troubled man. The 35-year-old wayside tea vendor in south Mumbai, one of the thousands who buy kerosene from the open market everyday, says he is paying 44 per cent more for the fuel as against four months ago.

"Prices used to be fixed at a maximum Rs 18 per litre before November. But now they fluctuate everyday and we are paying roughly Rs 26 per litre. On Wednesday, we paid Rs 28 per litre," he says about all food vendors along the street.

Traders and retail buyers of kerosene from the open market - "free sale", as they call it - claim prices have soared to "unaffordable levels" ever since the ban on kerosene imports was enforced in November 2003. Another rampant complaint is "news" that the fuel will simply not be available after another two months.

The Government banned imports when it was proved that fuel adulterators were mixing kerosene, cheaper at Rs 15 per litre when imported in open market, with diesel, which cost more than Rs 20 a litre. Now only Government-owned oil companies can sell kerosene used outside public distribution services (PDS) or household ration quotas for the poor. "Free sale kerosene was priced at Rs 15 a litre and was available at Government-controlled prices of Rs 9-9.25 per litre at ration shops, before November. Today, I am paying anywhere between Rs 25-27 per litre for the stuff. Now large traders say free sale kerosene may not be available for long. I may have to shut shop by April-end if this goes on," complains a trader who sells kerosene to vendors like Sheikh, on condition of anonymity.

Oil PSUs, meanwhile, say they have heard no "official" complaints and that kerosene is abundantly available so long as buyers can prove it is being used to cooking and industrial purposes only. Most retail and small traders claim oil companies only sell 12,000 kilolitres (one truck-load) kerosene. They say they do not know whom to turn to for buying smaller quantities. Oil companies agree to a faulty communication. But say among those complaining could be ones who can no longer sell adulterated diesel.

"There seems to be lack of communication with customers buying from the non-PDS market. Kerosene is available in plenty. And can be bought in small quantities from authorised dealers," according to a senior Indian Oil official who declined to be named.

"But kerosene prices will climb higher as we try to bring them on a par with diesel prices to avoid giving fuel adulterators a chance to get back into business," he says.