Ad Here  
New vehicle for old? Is this radical or Tughlakian? A regulatory commission for transport Winning accolades... India bites the BULLET Smiles through miles… Say Ola! Chant Uber! For a fair fare The elusive, much needed single urban transport authority Ready to battle Spectacular surges in surface transport Plan outlay drastically cut...
Is this radical or Tughlakian?
It is commendable that the NDA government wants to reduce long lines at petrol stations and save time to the motorists. However, the proposed idea of introducing mobile petrol stations for home delivery may not be the right solution.

Since 2015, in the US mobile petrol stations for home delivery have started to operate despite several safety issues and doubts on whether the law allowed it. Given the business-friendly environment in the US, many cities are trying to develop regulations to control these home delivery startups. Already there are startups like FILLD, WeFuel, Yoshi, Purple and Booster Fuels operating in San Francisco, Los Angeles, Palo Alto, Nashville, etc., even in the absence of not knowing if they can work or not. 


Price to save time...

The reason for the launch of these startups is not for reducing lines at service stations, but for saving the time of filling up at service stations for those who value saving as little as ‘fifteen minutes’ and are prepared to pay Rs 350 to Rs 450 for the service. In the US, a service station in some congested cities may cost as much as $2.5 million and mobile service stations on wheels may cost just $50,000. Startups hope that such a large difference may give them the needed profit margin to compete. However, India’s conditions are very different. 

Just like Amazon succeeding in disrupting brick and mortar based book sales, these startups hope to make petrol stations obsolete. Only time will tell if they succeed. They give an example of Uber to show how they may finally succeed despite not having a proper regulatory framework. 

In India, one of the reasons for long lines at gas stations is the need to meet the petrol demands of two wheelers. Few countries in the world have large numbers of two wheelers in comparison to four wheelers as India. On a per litre basis, two wheelers will take a lot more time than four wheelers since, at one filling, two wheelers purchase of fuel is not more than 10 per cent to 15 per cent of what four wheelers need. 

According to the petroleum ministry, there are 58,000 petrol stations in India. This implies that on average 380 customers per hour at any station which sounds unreasonable. Maybe the Department has overestimated the number of trips to the service centres. Even ignoring this error, it is a fact that in the major cities, customers have to wait in a long queue. But the solution may not be mobile pumps.  


Violation of several safety regulations

Transporting petrol to residences may be in violation of several safety regulations. In urban areas given the high level of traffic accidents, mobile pumps involved in such accidents can result in a massive fire since they carry highly combustible fuel. This can cause far more damage than mere vehicular accidents. 

The ministry could have thought of having more number of stations or having more number of service bays or better management of queues using the existing infrastructure. But with high land prices this is not economical.

Even with all the checks at the service stations today, it ‘s hard to prevent adulteration. In the case of mobile service stations, it will be even more challenging. Drivers of the mobile service stations with low salaries are likely to be tempted to adulterate fuel and also pilfer fuel. Thus the quality and quantity control of fuel dispensed through home delivery will be a big issue. Since the productivity of supplying through mobile service stations will be poor, customers may not be willing to pay for higher cost despite the convenience of not having to wait in line. 

Prudently, the petroleum ministry has decided to experiment on a trial basis in Puducherry before implementing it at the national level. If a proper cost-benefit analysis is done, it is likely to show that the home delivery of petrol for India’s conditions may be more a Tughlakian idea rather than a radical one to reduce long queues.

- Bhamy Shenoy 

Author :
Reported On :
Sector :
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
S-15, Industrial Estate,
Chennai - 600 032.
PHONE: +91 44 22501236