Position of Regulators
Dharmendra Pradhan, the Minister for Petroleum and Natural Gas, had first floated the idea of incorporating e-commerce into fuel delivery via a series of tweets on April 21 last year.[i] As per his tweets, door-to-door delivery of petro-products on pre-booking would help consumers save time and avoid long queues at petrol pumps.[ii] To hammer out a suitable model for the implementation of the plan, the Petroleum Ministry went on to hold consultations with representatives from the Petroleum Ministry, Oil Marketing Companies (OMCs), the Department of Consumer Affairs and the Department of Industrial Policy and Promotion.[iii]
However, on June 22, 2017, the Petroleum and Explosives Safety Organization (PESO) took the decision to disallow home delivery of petrol and diesel due to safety concerns.[iv] PESO is the statutory authority responsible for all matters relating to the usage and safety of explosives and petroleum in the country. In a letter to the Indian Oil Corporation Ltd. (IOCL) General Manager, Amarendra Kumar, PESO asked the IOCL to intimate other oil companies in Karnataka that fuel should not be provided to vehicles intending to carry out home-deliveries. Filling of tanks other than that of an automobile’s fuel tank connected to an engine was termed illegal and dangerous. Such an unsafe act would attract suspension or cancellation of licenses of retail outlets.[v]
This proclamation appeared to be in response to the activities of MyPetrolPump, a brand of ANB Fuels Pvt. Ltd., which had launched fuel home delivery services at select locations in Bangalore from June 18, 2017.[vi] The startup had undertaken the delivery of diesel to bulk buyers such as schools, apartment blocks, taxi fleet owners and the like. Fuel is sourced from petrol pumps only once an order for delivery has been placed. MyPetrolPump carries out an independent verification of the fuel quality along with an investigation into the background and previous malpractices, if any, of the petrol pumps.[vii] Via a letter to the Petroleum Ministry and PESO, the startup requested permission for the firm to resume its operations on a pilot basis until regulations and guidelines for door-to-door fuel delivery services were notified by PESO.[viii] There is no information available as to whether permission was granted or not.
Obstacles to the Home Delivery of Fuel
As per experts and regulators, doorstep delivery of fuel is violative of S. 3, 4 and 8 of the Petroleum Act, 1934[ix] as well as PESO’s licensing rules. Rule 76 of the Petroleum Rules, 2002, states that a tank vehicle with any class of petroleum cannot be loaded or unloaded except at a place which is situated within licensed premises. A tank vehicle is a vehicle whereon a tank with capacity exceeding 1,000 litres is mounted. Furthermore, the filling or replenishment of the fuel tank of any motor vehicle or internal combustion engine directly from a tank vehicle is not permitted. Certain safety norms also have to be met to protect from fire and other hazards. Rule 74 does not permit the parking of a vehicle on a public road or in any congested area or place within 9 metres of any source of fire. The loose sale of petrol in unapproved containers at a petrol pump has been prohibited since the Mandal Commission riots in 1990 due to the potential for use in arson and as explosives.[x] The use of mobile phones at petrol pumps was also banned until recent amendments allowed for the facilitation of digital payments at designated areas in the petrol stations.[xi] Doorstep fuel delivery could not only inflame the threat of fires in congested areas but also expose the public to noxious fumes in the event there is an accident.[xii] Such concerns surrounding fire hazards are not limited to Indian regulators; fire departments in the United States have asked members of the public to report fuel delivery trucks for inspection, remedial measures and possible violations.[xiii]
Fleets of doorstep delivery vehicles might be difficult for PESO to regulate initially, especially considering the hazards posed by congested urban localities and the threat of adulteration. Enforcement of anti-adulteration is relatively easier in petrol pumps compared to delivery vehicles. While the vehicles have to be fitted with pilfer-proof locks to prevent tampering of fuel, ensuring that fuel is transferred directly to a consumer’s vehicle, not loose containers, and that too in a premise safe for such transfers will prove to be burdensome.[xiv]
Value of Startup Initiatives in this Sector
However, while regulators are justified in their concern for public and property, allowing such startup initiatives to take off will ultimately lead to the creation of solutions to address the very problems regulators are facing. Traditional means of fuel retail such as petrol pumps have come under fire for allegations of rampant adulteration. Startup firms are attempting to address the adulteration problem by testing prototypes which have shown promise in detecting blue kerosene adulteration in diesel fuel. They are now in the process of extending the solution to other variants and blends of diesel and kerosene. Additionally, with the development of direct-to-equipment state-of-the-art refuelling systems, apartment associations have saved average diesel pilferage of Rs. 2.4 lakhs on a monthly basis by avoiding ineffective diesel transportation.[xv] One vehicle providing fuel to multiple sources has the benefit of not only being convenient, but also lowering pollution levels as it removes the need for multiple vehicles to make trips to petrol pumps.[xvi] The need for supplies due to emergencies or scarcity of petrol pumps, especially in rural areas, can also be met via doorstep deliveries.[xvii]
At present, despite the lack of clarity in the Petroleum Act and Rules, firms have resumed their diesel delivery operations.[xviii] The current regulatory framework is more favourable towards the delivery of diesel. Section 7 of the Petroleum Act says no licence is necessary for the transport and storage of certain classes of fuel (Class B non-bulk) if the total quantity in possession at any one place does not exceed 2,500 litres and it is contained in a receptacle not exceeding 1,000 litres in capacity.[xix] Class B petroleum includes diesel but not petrol.[xx]
Recent Events
At the inaugural session of the India Mobile Congress in Delhi on September 27, 2017, the Petroleum Minister once again expressed the hope that soon all petroleum products would be available on e-commerce platforms.[xxi] In fact, a few weeks after that statement, the Petroleum Ministry launched a startup funding scheme with ten oil and gas companies to offer financial support for startups involved in technological and business innovations that could bolster the oil industry.[xxii] Startups are keen to utilize the government initiative to further improve their fuel adulteration prevention and detection technologies.[xxiii] A draft of proposed amendments to the Petroleum Rules, 2002 was also released by the Central Government in November which inserted the definition of ‘portable service station’ in Rule 2, sub-rule (1):
(xixa) “portable service station” means a standalone premises installed on a firm foundation in accordance with the sound engineering practice specially prepared for fueling of motor vehicles and comprises of an above ground double walled petroleum storage tank integrated with dispensing system and connected facilities housed together in a closed container and of a type approved by the Chief Controller and premises licensed by the Controller”
PESO appears to be gradually coming around to the idea of doorstep delivery of fuel as well. In consultation with the IOCL, it finalized the design of the container to be used for the delivery of diesel.[xxiv] It gave IOCL the green light to start a trial run. The nation’s largest fuel retailer has started home-delivery of diesel in the city of Pune and intends to cover the rest of the country soon.[xxv] Keeping in mind the Petroleum Ministry’s faith in startups as an instrument to upgrade fuel delivery systems, PESO must bring them into the fold at the earliest to capitalize on the technology-based solutions that startups have already begun generating.
[This post is authored by Varsha Rao, a fifth year undergraduate student of National Law University, Delhi, during her online internship with TRA. Nehaa Chaudhari, Public Policy Lead, TRA, gave inputs.]
[i] Twitter, https://twitter.com/PetroleumMin/status/855357229175681028
[ii] Twitter, https://twitter.com/PetroleumMin/status/855358286626934784
[iii] Surbhi Prasad & Saurabh Kumar, Safety concerns emerge over Modi government’s plan to deliver petrol, diesel at consumers doorsteps, FINANCIAL EXPRESS, June 11, 2017, http://www.financialexpress.com/market/commodities/fuel-availability-a-home-delivery-in-line-of-fire/711927/.
[iv] Neha Madaani, Petrol Safety Body Forbids Doorstep Delivery of Fuel, THE TIMES OF INDIA, June 24, 2017, https://timesofindia.indiatimes.com/city/pune/petrol-safety-body-forbids-doorstep-delivery-of-fuel/articleshow/59294330.cms.
[v] Supra note 5; See also Bengaluru Petrol Pump Dealers Told Not to Cater to Home Delivery Fuel Firms, NEW INDIAN EXPRESS, June 23, 2017, http://www.newindianexpress.com/cities/bengaluru/2017/jun/23/bengaluru-petrol-pump-dealers-told-not-to-cater-to-home-delivery-fuel-firms-1619947.html.
[vi] PTI, Bengaluru: Home-delivery Fuel Firm ‘MyPetrolPump’ Hits Roadblock, ONEINDIA, July 4, 2017, https://www.oneindia.com/india/bengaluru-home-delivery-fuel-firm-my-petrol-pump-hits-roadbl-2485205.html.
[vii] Shivam Srivastav, Meet the man behind MyPetrolPump, India’s first fuel delivery service, FACTOR DAILY, June 22, 2017, https://factordaily.com/news/mypetrolpump-bengaluru-diesel-delivery-service/.
[viii] Supra note 6.
[ix] Roshun Povaiah, The Dangerous Business of Home Delivery of Petrol and Diesel, THE QUINT, April 24, 2017, https://www.thequint.com/tech-and-auto/car-and-bike/home-delivery-of-petrol-and-diesel-licensing-norms-safety-hazard.
[x] Ibid.
[xi] Ibid.
[xii] Ibid.
[xiii] Julia Carrie Wong, Gas delivery startups want to change the world – but will they blow it up first?, The Guardian, May 5, 2016. https://www.theguardian.com/technology/2016/may/05/gas-delivery-tech-startups.
[xiv] Fuel at doorstep: Safety apart, here is all that needs to be fixed before starting home delivery, FINANCIAL EXPRESS, July 1, 2017, http://www.financialexpress.com/opinion/fuel-at-doorstep-safety-apart-here-is-all-that-needs-to-be-fixed-before-starting-home-delivery/744137/.
[xv] PTI, MyPetrolPump to Raise Funds from Central Initiative, NEW INDIAN EXPRESS, Oct. 30, 2017, http://www.newindianexpress.com/pti-news/2017/oct/30/mypetrolpump-to-raise-funds-from-central-initiative-nbsp-nbsp-1687227.html.
[xvi] Supra note 7.
[xvii] Aparajita Gupta, Can Fuel be Delivered at Your Doorstep? Possible Say Experts, THE QUINT, Oct 14, 2017, https://www.thequint.com/news/india/ecommerce-petrol-diesel-delivery-online.
[xviii] Supra note 15.
[xix] Mamta Bhardwaj, Govt circular blocks home delivery of fuel, DECCAN HERALD, June 25, 2017, http://www.deccanherald.com/content/619145/govt-circular-blocks-home-delivery.html.
[xx] Saurabh Kumar, Bengaluru start-up starts diesel home delivery in city, FINANCIAL EXPRESS, June 23, 2017, http://www.financialexpress.com/industry/bengaluru-start-up-starts-diesel-home-delivery-in-city/731696/.
[xxi] Petrol and diesel will be delivered at your doorstep soon, says Union minister Dharmendra Pradhan, SCROLL, Sep 27, 2017, https://scroll.in/latest/852145/petrol-and-diesel-will-be-delivered-at-your-doorstep-soon-says-union-minister-dharmendra-pradhan; See also https://twitter.com/dpradhanbjp/status/912994897896005632.
[xxii] Harsh Upadhyay, Petroleum Ministry announces Rs. 320 Cr fund for start-ups in oil sector, ENTRACKR, Oct. 26, 2017, https://entrackr.com/2017/10/petroleum-rs-320-cr-startups/.
[xxiii] Supra note 15.
[xxiv] Saurabh Kumar, Soon, get petrol-diesel delivered at your home; IOC finalises container design, FINANCIAL EXPRESS, Sept. 20, 2017, http://www.financialexpress.com/india-news/soon-get-petrol-diesel-delivered-at-your-home-ioc-finalises-container-design/862395/.
[xxv] Bilal Abdi, India’s first home-delivery of Diesel kicked off in Lune by IOC, ECONOMIC TIMES, March 16, 2018, https://energy.economictimes.indiatimes.com/news/oil-and-gas/indias-first-home-delivery-of-diesel-kicked-off-in-pune-by-ioc/63336154.
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