Quote:
Originally Posted by ask77 I have heard from somebody that most of the petrol/diesel bunks cheat on either the quantity or quality of fuel supplied . |
Did you know that for most of the past decades, THE eligibility criteria for getting a petrol pump dealership was a combined family income below Rs. 2,00,000/- per annum ?
99% of petrol pump dealers do not know exactly what Temperature Correction or Temperature Compensation of Liquid Fuels is. It is the best kept secret of the oil industry worldwide.
Please refer to the thread:
http://www.team-bhp.com/forum/indian...y-display.html
for a part explanation.
What happens in reality is that the fuel which is not Temperature Corrected
shrinks when it goes into a cooler underground storage tank at the petrol pump. So the petrol dealer cannot sell all the liters that he has purchased. These are known as 'Phantom Liters'.
The petrol dealer also pays Sales Tax, in advance on these 'Phantom Litres' which he cannot pass on to the customer. Neither does he get a Sales Tax rebate, except a notional rebate in West Bengal !
Best is a COCO pump next door to such a petrol dealer in India: The COCO receives only Excise Paid fuel, that is also Temperature Corrected !! This is shown as a stock transfer so it's not the first sale as in the case of an ordinary petrol dealer. Hence the first sale in case of a COCO Pump occurs at the nozzle directly to a customer, the COCO pump totals the weekly sales and then pays Sales Tax to the State Government ONLY on the ACTUAL SALE, not on invoiced liters ! (Divide and Rule ?) (Constitutional Equality?)
You might ask why this was not a problem in the past? Some of the reasons are:
1. A few decades ago, this problem of temperature correction was minimal because fuel depots had underground storage tanks too. Hence the temperature difference in supplies to petrol pumps from underground tank to underground tank did not vary much as ground temperature is fairly constant in a small geographic area. Petrol depots were very near petrol pumps.
Now large depots have been shifted out and have above ground storage tanks. The temperature of the supplies can be as high as 45 degrees ! (Sunlight and agitation during transport further increases the temperature).
2. Margins were between 7 to 10 %. After nationalization in 1974, dealer margins were more or less frozen EVEN THOUGH THEY COME DIRECTLY FROM THE CUSTOMER ! Today retailer margins are about than 2% and have varied between 1.3% to 2%.
3. In the 1950's and 60's, petrol dealers got reimbursed for electricity, telephone bills, air compressors, air gages, uniforms (that how the concept of free air was born) but not today!
Up to 15 days credit was available on petrol and diesel and three months credit on lubricating oils! Recently, R.T.G.S. (Real Time Gross Settlement like N.E.F.T.) has been introduced for payment in advance so some petrol dealers actually end up paying on Friday for stocks received on Monday!
4. You might say that on paper it sounds good, given today's sales. You are right. But remember:
For every 8 degrees C difference in temperature, petrol volume expands / contracts by 1%
For every 8 degrees C difference in temperature, diesel volume expands / contracts by 0.6%
Therefore, if petrol is supplied to a petrol dealer at 31 degrees C, instead of the world standard of 15 degrees C, you loose 2 % volume!
So you are trading the fuel for free or with a loss in capital.
5. The Slab system: For past decades, till it was abolished in the late 90's, there was also a slab system of dealer commission. There were four slabs in sales figures: The more you sold, the lesser your margin would become. And if you sold more than 50,000 liters of one product (1st slab), then your commission for second product automatically fell for the other product to the 2nd slab! Shocking, but true.
6. This is the real reason that forces a petrol dealer to adjust. Most honest dealers will cross subsidize their petrol pumps with income from allied businesses. When this fails, some short sell. When this fails, some adulterate and some leave the dealership or sell out.
If you look at the long standing (till recently) criteria for selection of a petrol dealer above, he or she would not survive the first years' balance sheet of that petrol pump!
And when petrol dealers have asked their oil companies in the past to explain this loss, vague answers like evaporation, tank breathing, pilferage and even supernatural (sic) causes have been mentioned in Inspection and Call Reports (which can only be made by Gazetted Officers). The above causes have been scientifically proven to be negligible! Only theft en-route is a significant cause, but it is only possible because Temperature Correction is not applied.
On top of this there is a peculiar rule that makes +4 to -4% variation in tank stock volume actionable. So in most inspections, petrol dealers were told to be thankful that no action was being taken 'this time' and in many cases, Sales Officers of the Oil companies would spend hours using every maths trick in the book to get tank variation into 'normal' limits. It took decades to convince the Oil Ministry of the simple fact that one can be penalized for > +4% stock, but not a > -4% loss !
It is impossible to fit 50 years of history into this small box, but in short, the honest petrol dealer is as much a victim as a customer is.
Given Temperature Correction, cheating at petrol pumps will disappear. And who knows this better than the Oil Companies, who use Temperature Correction day in and day out among themselves?
