Our Bureau

New Delhi, Oct 17

THE Petroleum Minister, Mr Mani Shankar Aiyar, today said that the Government proposes to take further action for not only rationalising allocation of kerosene to the States and Union Territories but to take strict measures to curb adulteration and diversion. The Minister was speaking at a function on `Jan Kerosene Pariyojna' today.

While receiving a comprehensive study by the National Council of Applied Economic Research (NCAER) to assess the genuine demand and requirement of kerosene, the Minister said that NCAER had reported very high (40-50 per cent) to extremely high leakages (more than 50 per cent) of kerosene under public distribution system (PDS) in Assam, Chhatisgarh, Tamil Nadu, Uttaranchal, Bihar, Chandigarh, Delhi, Jharkhand, Orissa, and Punjab.

Kerosene, which is heavily subsidised - partly through the Government Budget and partly by the public sector oil companies - is a very sensitive product, the Minister said.

"The total subsidy on PDS kerosene in 2004-05 was over Rs 10,000 crore. Having incurred such a heavy burden, it is important to see that this product reaches the entitled beneficiaries in the quantities to which they are entitled."

Unfortunately, the existing system of distributing this product leaves much to be desired, he said, adding that the price difference between kerosene and diesel provides incentive to unscrupulous elements to divert the product for adulteration of diesel.

Prompted by the situation, the Government had commissioned NCAER to undertake this study. Moreover, to monitor the distribution mechanism and to curb diversion, the Ministry of Petroleum in consultation with the States and UTs has worked out an innovative pilot project for radically revamping the distribution network, he said.

The pilot project has been launched in 420 blocks effective from October 2 for a period of six months.

Based on the experience of the pilot project, the scheme would be extended to cover all the blocks in the country after its effectiveness has been evaluated by NCAER, the Minister said.

In its report, NCAER has estimated the diversion/leakages of PDS kerosene at about 39 per cent of the total sale of the product in 2004.

Although concerned about the diversion, the Minister said that he was relived to note that contrary to common perception, diversion of kerosene for non-household use has been estimated at about only 18 per cent.

This shows that public sector oil marketing companies are on the right path in their endeavour to fight adulteration, although a lot still remains to be done, he said.

(This article was published in the Business Line print edition dated October 18, 2005)
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