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Tamil Nadu
By N. Ravi Kumar
Fuelled by a substantial price difference between diesel and the imported variety of kerosene, the trend is proving to be a drain on the exchequer, besides causing damage to the environment. Initially restricted to Salem and Namakkal — a transport hub — the practice is being replicated by truckers and bus operators in Vellore, Chennai, Coimbatore, Erode and Tirupattur. The use of white kerosene, popular name for parallel market kerosene, for operating generators too is catching on, oil industry sources say. The estimated drop in diesel sales Statewide in the first quarter of 2002-03 (compared to sales during the corresponding period in the previous fiscal) is around 47,495 metric tonnes. While the drop in retail sales is about 18,000 MT, in direct sales (to industries), it is 29,495 MT. During 2001-02, diesel sales dipped by 240,481 MT from the 2000- 01 sales of 34,88,822 MT. The general recession also contributed to the slump in sales. The substitution of a litre of white kerosene for diesel means Rs. 4 loss to the State Government. The Centre losses Re.1 road cess on diesel. At the current levels, the oil industry expects diesel sales to drop by a whopping 1,50,000 MT in the current fiscal. More than their concern at the absence of stringent action to curb the trend, what is irking the oil industry is the granting of new licences for retailing white kerosene. ``Since April, at least 260 new retail licences in Salem and 91 in Namakkal have been issued," said a source. Questioning the logic behind the grant of new licences, the sources pointed out that only for a few months did the Civil Supplies department instructed the district administration to curb the use of parallel market kerosene. Use of white kerosene as auto fuel, the sources said, was a violation of the Motor Spirit-High Speed Diesel (MS-HSD) Control Order and the Essential Commodities Act.
Difference in ST crucial
The driving force behind the practice is the substantial difference in sales tax levied on the two petro-products. While it is four per cent on white kerosene, the levy on diesel is 22 per cent. While a litre of white kerosene is sold at Rs.13.75, diesel is priced at around Rs.20. Among the first to feel the pinch were petroleum dealers. According to M.Kannan, secretary, Tamilnadu Petroleum Dealers Association, the only way out for the State Government is to levy an entry tax on parallel market kerosene at a par with sales tax rate on diesel. Confirming the growing use of kerosene in automobiles, transport industry sources say the resultant `savings' for many truckers enable them to meet the hire-purchase cost of the vehicle. A former IIT professor and an expert in engine combustion technology, B.S.Murthy, however, says, ``when kerosene is substituted for diesel in motor vehicles it will lead to incomplete combustion and change the ignition quality of the fuel. The vehicles will, no doubt, run but the emissions will be very harmful because kerosene might have a lot of aromatics that are carcinogenic''.
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