the killing stench of fuel

Adv P & H High Court Chandigarh

At last count, 11 people had been arrested for cremating Yashwant Sonawane alive in Malegaon. Some years ago, eight people were judged guilty of shooting S Manjunath in Gola Gokarnath. The motive was the same. Sonawane and Manjunath were interfering with the oil adulteration mafia.


These murders were crimes waiting to happen. The ultimate responsibility for those murders lies with the makers of the bizarre subsidy policy that created the underlying motive. The stakes in the oil adulteration business are large — more than enough to ensure people will kill to keep it running.



 The financial logic created by bad subsidy policies is easily explicable. Crude oil consists of various hydrocarbon compounds. It is refined through fractional distillation. By heating to specific temperatures, heavier and lighter compounds can be separated.


Lighter, more volatile compounds such as petrol evaporate out at lower temperatures while heavier compounds like kerosene, diesel, paraffin and lubricants separate out at higher temperatures. The vapour is collected and further cleaned and refined.


Kerosene and diesel are next to each other on the separation scale. Kerosene is a little more volatile and also a dirtier fuel with more impurities. The cost of production is almost the same with kerosene marginally cheaper.


The aviation industry is by far the largest kerosene consumer since kerosene is used as an aviation turbine fuel (ATF). It is also used for cooking stoves, gensets, and lanterns. Diesel has a wider utility range encompassing internal combustion engines, railway engines, industrial boilers, turbines, gensets and so on.


Kerosene and kero-diesel mixes can run diesel engines but only at lower efficiency and at the cost of higher pollution. In free markets, where kerosene and diesel cost much the same, there is little incentive to substitute kerosene for diesel. The marginal cost difference doesn't compensate for lower efficiency and extra wear-and-tear.


India's policy imposes price controls on diesel and kerosene and, thus, introduces many distortions. An artificial distinction is made on the basis of end-user. Kerosene for household purposes is labelled "kerosene" and supposedly marked with a blue dye Household kerosene is retailed at Rs 12-13/litre and distributed via public distribution system (PDS). "ATF" is priced at roughly thrice the cost while being exactly the same substance.


Diesel is sold at roughly the same price as ATF. Since the petrol decontrol, the price differential between petrol and diesel has widened to around 35-40 per cent. In free markets, the petrol-diesel price differential is 5 per cent. In nations with stringent pollution controls, the retail price of diesel is sometimes higher than petrol because it requires extra cleaning. Diesel-petrol mixes can run petrol engines, though efficiency drops and wear and tear increases.


The margin for diverting PDS kerosene to the ATF market, or to adulterating diesel, is about 200 per cent. The margin for adulterating petrol with diesel is around 35 per cent, which is substantial in itself. The market has vast volumes. The standalone diesel adulteration business is supposedly worth Rs 10,000 crore and that may be an under-estimate.


Given such attractive margins and huge volumes, the odd murder should hardly raise eyebrows. The racketeers have the resources required to corrupt as many state functionaries as they deem necessary, and to eliminate those who refuse to take a cut. It appears that only two out of the vast hordes of officials involved in the system were brave enough, honest enough and arguably, stupid enough to require elimination rather than falling prey to intimidation or accepting kickbacks.


The raids and arrests are an eyewash. The big fish will lie low for a bit; some bottom feeders will be punished. Adulteration will thrive. Until and unless the policy changes, no amount of policing will prevent the recurrence of similar crimes.


Change the system. Eliminate the absurd distortions. Or else, live with the occasional murder and the day-to-day stench of corruption.




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