Kerosene slips through greasy palms

Authorities tread on slippery ground trying to resolve the fuel crisis in Mysore

By Bhamy V Shenoy
Published: Tuesday 28 February 1995

-- A KEROSENE crisis is crippling daily life in Mysore city. The kerosene demand in the city is at least 2,000 kilo litres (KL) per month, while the allocation by the Food and Supplies Department is only 1,600 KL. Even out of this woefully insufficient allocation, the department is diverting about 15 per cent to other places. It defies all logic.

In my estimate, the government subsidy to kerosene at an all-India level is around Rs 1,500 crore. But 30 per cent of it does not reach the target consummers. To the contrary, kerosene generates about Rs 5,000 crore worth of black money, besides being environmentally hazardous.

During my latest election campaign, I discovered that more than 2/3rds of the population in Mysore depended on kerosene for its fuel. Many of them are forced to buy from the blackmarket as the fair price shops cannot meet the demand. But, amazingly, the Food and Supplies Department attached to the district collector's office has been declaring that kerosene allocated to the city is surplus and that every month 200-300 KL of kerosene needs to be diverted from the city to other parts of the state.

In 1989, a local consumer organisation conducted an extensive study of kerosene supply in Mysore. While the demand for kerosene was 1,800 KL per month, the city's allocation was only 1,600 KL. To make up the deficit, part of the kerosene allocated to the rest of the district was diverted to the city, in the belief that people in the rural areas had easy access to firewood and agricultural wastes which could be used as fuel.

A significant recommendation made by the study was to sell kerosene in the public distribution shops (PDS) like other commodities, instead of through hawkers. But the suggestion was consistently ignored by the authorities and licenses continued to be issued unchecked. Only after the present DC's arrival was the issuing of new hawker's licenses stalled.

These days, a blue dye is being added to PDS kerosene to check its diversion and sale in the open market. But this ploy may not have much impact. In Sweden, they had a similar problem with a huge price differential between home heating oil and diesel: the dyes did not eliminate the problem of diversion. If such is the case in Sweden, where the rule of the law is vigorously applied, one can imagine the near impossibility of such measures succeeding here.

But by introducing a coupon system, we might be able to eliminate the problem. Each family with a ration card will get a yearly quota of coupons which it can redeem at PDS outlets to buy kerosene. PDSs will get replenishment stock of kerosene only on the presentation of these coupons. If the PDSs divert any supplies to the blackmarket, they will not get kerosene coupons, and that in turn will reduce their subsequent kerosene supplies from the PDS system. There is always the problem of printing fake coupons, but this should be manageable.

Besides hardship caused to the poor with diverted kerosene being used to adulterate diesel and petrol, kerosene is not exactly environmentally benign. Since combustion engines are not designed to burn kerosene, the fuel will lead to inefficient combustion. Even if there is greater vigilance on the part of officials to implement the Motor Vehicles Act, it would be impossible to prevent this offence, since kerosene is substantially cheaper than both petrol and diesel. We should gradually try and raise the price of kerosene to at least par with diesel to reduce the temptation of saving money by mixing.

Given the prevalence of poverty and the constant and crying need for kerosene, the government should take steps to improve the current system. In future, the difference between PDS kerosene and free market diesel and petrol is likely to widen. This will give an even greater incentive to divert PDS kerosene into the blackmarket.

There are already fights among people waiting to buy kerosene through the side door and between consumers and hawkers. If we do not develop a foolproof system quickly to deliver kerosene, we could be faced with bloody riots in urban areas in the near future.

---Bhamy V Shenoy is associated with the Karnataka Network of Consumer Organisations based in Mysore.

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