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Fixing fuel home delivery PDF Print E-mail
Saturday, 01 July 2017 00:00
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Apart from safety, adulteration issue needs addressing

 

It is true that home delivery has caught on as a concept, and is also one of the biggest reasons for the success of e-commerce firms, but it is not clear why petroleum minister Dharmendra Pradhan has plumped in favour of it for petroleum products. It will obviously make life easier for marketing firms that do not have enough retail outlets, but it is fraught with danger which is why PESO (Petroleum and Explosives Safety Organisation) is opposed to it—enforcing a ban on lighting a cigarette at a petrol pump is easy, but how do you do this in a home-delivery environment? More important, unlike in the case of an LPG cylinder, where adulteration is not as easy—and where consumers can weigh the cylinder to see if gas has been pilfered—it is relatively simple to do this while doing home delivery. Even if the minister insists that only special delivery vans with special pilfer-proof locks be used to ensure there is no tampering with the fuel, how is anyone to ensure the petrol/diesel is only put inside a vehicle when it is at the consumer’s premises? Regular checks, or even random ones, by agencies entrusted with enforcing anti-adulteration is easier at petrol pumps and that much more difficult for home-delivery.

While preventing adulteration is never easy, the root cause also needs to be addressed. And that is the sharp difference in prices of various fuels like petrol/diesel and kerosene. While petrol costs Rs 74.56 in Mumbai and diesel Rs 58.80, kerosene costs a mere Rs 20.43. If the government’s pricing is not bad enough, dramatically different VAT rates complicate the problem further—VAT on petrol is 26% in Mumbai with an additional Rs 11 surcharge, 24% on diesel with a Rs 2 surcharge and 3% on kerosene. Indeed, Pradhan has, in the past, himself talked of the massive amount of adulteration and managed to convince states to reduce their kerosene consumption based on this—if a lakh litres of kerosene is mixed with diesel, he argued, states stood to lose Rs 9 lakh, assuming an average VAT rate of 21%. In the past, it could be argued that while the price differential fuelled the attractiveness of adulteration, there was little the government could do about it. But now, with most of the population covered by Aadhaar and with Aadhaar-seeded bank account and a healthy seeding of ration cards as well—78% of all ration cards are Aadhaar-seeded and 42.3% of ration shops are PoS-enabled—there is a fairly robust alternative in place. As in the case of LPG, the government must move to giving kerosene subsidies in cash to the beneficiaries but charging them the market rates. Once the biggest reason for adulteration is taken care of, the government can relook the home-delivery angle, though getting over the safety angle seems very tough—and that is paramount.

 

 

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