The Hindu Business Line : Ministry seeks Rs 700 cr for efficient kerosene delivery

THE Petroleum Ministry has sought around Rs 700 crore from the Finance Ministry to finance a scheme to ensure efficient delivery of kerosene to consumers across the country. The scheme entails greater involvement of the public sector oil marketing companies in distribution of kerosene to consumers.

Currently, kerosene reaches the consumers through 6,500 kerosene dealers appointed by the public sector oil marketing companies, Indian Oil Corporation, Bharat Petroleum Corporation Ltd, Hindustan Petroleum Corporation Ltd and IBP Ltd. These dealers are scattered across the country and unevenly distributed.

Oil marketing companies deliver kerosene to the retailers from their marketing installation points. However, this arrangement does not ensure smooth supply of products. This also leads to leakage of the product for adulteration with diesel.

The Petroleum Ministry has proposed that the oil marketing companies create an additional operating point at the sub-wholesale level. Here, the companies will set up tankages and other such infrastructure to store kerosene at each of the 6,500 blocks in the country. This is expected to cost between Rs 550 crore and Rs 700 crore. The Petroleum Ministry has sought this sum from the Oil Industry Development Board (OIDB), which fetches the exchequer Rs 4,500 crore per annum through the OIDB cess. Though termed a cess, the funds actually net into the Consolidated Fund of India.

The maintenance of the marketing assets and the margins for the wholesaler will cost around Rs 250 crore per annum. The Petroleum Ministry has suggested that this recurring funding requirement be met from the Budget.

According to industry sources, while the upside of the scheme is that there will be better service, product quality and supply security for the consumer, the downside is the additional cost involved in setting up assets and servicing them.

On July 3 this year, the Petroleum Minister, Mr Mani Shankar Aiyar, held a meeting of the chiefs of public sector oil marketing companies where it was decided that the oil companies would market kerosene to improve the delivery mechanism to consumers. A Committee of Secretaries met on August 6 to consider this issue and a decision is awaited.