The Hindu : Curbs on white kerosene import hit small industries

Online edition of India's National Newspaper
Saturday, Dec 13, 2003

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National

Curbs on white kerosene import hit small industries

By N. Ravi Kumar

CHENNAI DEC. 12. Thousands of small and medium enterprises in Tamil Nadu that depend on kerosene for captive power generation face increased fuel bills following the recent Central Government notification banning its import by private companies.

The impact of the Commerce Ministry's November 25 order permitting the import of white kerosene, as the parallel product is popularly known, only by the State Trading Enterprises — four national oil marketing companies — has been severe, particularly for textile and continuous industrial process units in and around Coimbatore, say entrepreneurs.

Most of the mills and units had been driven to the verge of closure as the product used for operating generator sets has become scarce. Even if available, its price has increased by Rs.5 a litre in the last ten days, according to an entrepreneur in Coimbatore. From around Rs.9 a litre in 2000, the price hovered around Rs.14 in mid-November this year. After the order, a litre of the parallel market kerosene has gone up to even Rs. 20 in several parts of the State.

Many industrial units had surrendered their power (grid supply) connections, the Chairman of the Southern India Mills Association, Vijay Venkataswamy, said. "The mills heavily rely on kerosene, as the power generated thus is cost-effective and of good quality."

Faced with the daunting task of being globally competitive in terms of their product pricing, many of the spinning units had made alterations to their generator sets to accommodate kerosene in lieu of diesel. By opting for kerosene — a trend in vogue for a few years now — a spinning mill not only ensures the availability of adequate quantity and quality of power but also saves handsomely.

As per an industry estimate, a mill with 10,000 spindles substituting kerosene for diesel gets an equivalent power output at slightly less fuel consumption and saves as a result over Rs. one lakh a month. A litre of kerosene generates over three units of power.

The president of the Tamil Nadu Small and Tiny Industries Association, K.V. Kanakambaram, said the Central order was also bound to affect other industrial consumers of the parallel market kerosene, including those using it for cleaning purposes and as a raw material in chemical industries.

Kerosene is a popular fuel for operating generator sets despite numerous guidelines of the Ministry of Environment and Forests and the Ministry of Petroleum and Natural Gas seemingly in conflict with one another. While the former had laid down the pollution norms for use of kerosene in generators, one of the orders of the latter said some of the diesel generator set manufacturers advocating the use of kerosene in place of diesel was in violation of some gazette notifications.

An entrepreneur in Coimbatore admitted that industrial users were thriving on the grey areas in the law. Officials of the oil companies too admit to the lack of clarity on the issue.

Nevertheless, the oil companies are happy with the move to control kerosene import, as the product was increasingly being substituted for diesel in heavy vehicles. Nationwide, the diesel sales in the first half of this fiscal had dipped by about 3.2 per cent compared to the corresponding period in 2002-03 in spite of a good monsoon and growth in automobile sales.

Many of the industrial users, however, say that the misuse of kerosene (in the transport sector) is limited. "Even those who did so have stopped using kerosene in vehicles after encountering problems in the engines," Mr. Venkataswamy said. Irrespective of who the importer is, the industrial users only want an adequate supply at reasonable prices.

The only concern, an official in the Anti-Adulteration Cell of the Ministry of Petroleum and Natural Gas said, "was to check seepage of the product from the industrial users to the transport sector."

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