Kerosene woes: Fair price shops want to go the kirana way

NEW DELHI: Owners of fair price shops selling kerosene want to convert their outlets into kirana stores as their income fell due to the 22% fall in supply of highly subsidised kerosene supply in last four years, government and industry officials said.

Kerosene diversion is rampant across the country because the highly subsidised fuel is often mixed with diesel, giving unscrupulous dealers a hefty margin of Rs 36 per litre, officials said. The pump price of diesel is Rs 51.40 a litre in New Delhi while kerosene is sold at Rs 14.96 per litre.

"Despite stiff resistance from state governments, the oil ministry is continuously reducing their quota based on increased supply of liquefied petroleum gas (LPG), which is a cleaner alternative to kerosene," an executive of Indian Oil Corp said. Kerosene, which is considered as the fuel of the poor, is sold at 70% below market rates.


Fair price shop owners, who sell kerosene in the retail market, are up in arms against a sharp reduction in supply that has affected their income. "Kerosene sale is a volume game as dealers' commission is only about 90 paise per litre. There is no scope for raising commissions for a product that is sold below Rs 15 per litre. Besides, retail sale of kerosene is a state subject," an oil ministry official said. Some district administrations have proposed to convert fair price shops for kerosene into kirana stores, so that the retailer would have enough income, oil ministry officials said.

"We expect a drastic cut in subsidised kerosene supply to states in future with the implementation of cash transfer of kerosene subsidy directly to the consumer," the official said. Three states - Rajasthan, Maharashtra and Goa - have agreed to direct transfer scheme and with increasing penetration of Aadhaar enrollments, its implementation is expected shortly in several other states, which will force kerosene dealers to adopt a different business model.

The government has saved Rs 2.40 crore annually from one block, Kotkasim in Rajasthan, where kerosene demand dropped from 84,000 litres to 28,000 litres by shifting to direct transfer of subsidy, officials said.