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Rs. 10,000cr fuel black mkt killed addl. DC
New Delhi, JAN 27 (AGENCIES/IANS):
Published on 28 Jan. 2011 12:47 AM IST
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A thriving black market in kerosene, estimated at ` 10,000 crore a year, killed additional collector Yeshwant Sonawane. A litre of kerosene sold at ration shops is often costlier than a bottle of packaged water. Most of this “poor man’s fuel” is pilfered and sold in the black market for a price two-three times higher. Sonawane tried to meddle with this lucrative illegality and paid with his life. Actually, most enforcement officers make peace with the fuel mafia and get some crumbs from it. It would appear Sonawane didn’t.
The oil ministry has tried to work out the maths of this black market. According to its estimates- said to be conservative- as much as 40% of kerosene supplied for the poor is siphoned by ‘‘organized gangs of mafia proportion’’. State-run oil companies annually supply 9-10 million tonne of the fuel for sale through ration shops; 40% of that means almost 4 million tonne- or about 5200,000,000 litres of kerosene- is flowing into the parallel market. At around `31 per litre in the open market, this trade is worth `16,120 crore. That’s why the official estimate (done in 2006) is said to be conservative.
“Even at government-capped price, the value of this diverted kerosene will be huge. Add the money made by selling it in the black market for more than twice the controlled price, and you will get a really large trade involving thousands of people,” said a senior marketing executive of IOC, the largest fuel retailer. 4-5 million kilolitres of kerosene is diverted every year An interim report by National Council of Applied Economic Research (NCAER) had in 2005-06 said nearly 4-5 million kilolitres of kerosene was being diverted every year. It had put the stakes at `10,000 crore at the time when consumption levels were hovering a tad higher at 10-11 million tonne a year.
Around the same time, a study by National Institute of Public Finance and Planning (NIPFP) said government subsidy gave kerosene an undue price advantage against other fuels and created ground for diversion. The NIPFP study also said kerosene and cooking gas subsidies benefit semi-urban and urban consumers more, respectively, rather than the rural poor. “Decades of subsidies have failed to shift the fuel consumption patterns away from biomass in rural areas.”
Oil company executives said about 20% of the total kerosene supplied to the ration shops are used for adulteration of diesel and lubricants used by truckers.
Now a substantial quantity is smuggled to Bangladesh, Nepal and Bhutan as the fuel is priced much higher in those countries. “When the studies were being conducted, kerosene was even being smuggled to Sri Lanka. But it may not be the case now,” the IOC executive said.
Oil company executives say that about a third of the diverted kerosene is used as fuel (no doubt, by the poor at a hefty premium). The remaining quantity is used for adulteration or is smuggled out of the country.

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