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Tuesday, Dec 19, 2006

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IndianOil to market kerosene in small containers

Richa Mishra

Targets non-public distribution scheme consumers

Pilot project
Indications are that Haryana is being considered as the location for the pilot plant
The company is likely to commence production by June next
The cost of the packaged kerosene is estimated to be more than Rs 30

New Delhi , Dec. 18

Soon kerosene could be made available in small containers in urban and semi-urban markets. Indian Oil Corporation is examining the prospects of marketing kerosene in portable containers to make the product available in the open market to customers not covered under the public distribution system.

Sources told Business Line that "the purpose behind this thinking is to make the product available in the free market, where kerosene is not available. Currently, kerosene meant for PDS is diverted and used for activities like cleaning, polishing and even to workshops for industrial use. As per estimates, almost 17-18 per cent PDS kerosene is diverted and sold at higher prices for such activities. To fill this gap, it is being considered to market kerosene in small containers, which would also ensure easy availability of the product."

The PDS kerosene, which is being supplied at Rs 9 per litre, is perhaps one of the lowest prices in any non-oil producing nation. With so much difference in the price of fuel sold below the economic price for benefit of consumers, the possibility of adulteration of the costlier fuel by the cheaper one has been a cause for concern for the Government and the oil marketing companies.

In order to check the black marketing and diversion of PDS kerosene, the Government, on its part, has been taking initiatives, besides launching a pilot project for radically revamping the PDS kerosene distribution network.

Packaging material

As regards the packaging material to be used for marketing kerosene in small containers, sources said glass bottle of one litre capacity of 525 gm weight with suitable cap is being considered after extensive testing at the Indian Institute of Packaging and IndianOil's research and development centre.

Indications are that Haryana is being considered as the location for the pilot plant with the capacity of filling 12,000 bottles per day and the test marketing is also likely to be kicked off in Haryana.

The company is looking at June next to commence production and marketing of kerosene in small containers. However, pricing remains a sensitive issue, sources said. The cost of the packaged kerosene is estimated to be more than Rs 30, as it would factor in the cost of packaging material, operational and transportation costs, dealer and retailer margins, as well as duty and taxes as applicable.

"We have to see whether a mechanism could be worked out to reduce prices," the sources said.

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