The Bhutanese Leading the way.
As large numbers of Euro 6 or BS 6 diesel vehicles break down in the country, the prime suspect is the fuel quality in the country, and this suspicion was confirmed when two lab results obtained by vehicle dealers showed the fuel was contaminated in two affected vehicles.
The next big questions are, where is the adulteration of fuel happening and how.
Local adulteration unlikely
Minister of Industry, Commerce and Employment, Namgyal Dorji, has ruled out local oil dealers adulterating fuel by mixing with kerosene, due to the similar market rates of kerosene and diesel (HSD) in Bhutan.
This is true, as kerosene in Thimphu is Nu 66.34 per liter compared to Nu 63.81 for petrol and Nu 66.60 for diesel, and so it makes no economic sense to use kerosene to adulterate the other two fuels in Bhutan.
Price gap incentive
However, The Bhutanese after talking to some oil industry insiders and doing some research found the same couldn’t be said in India where there is still a major price gap between kerosene and its petrol and diesel prices due to higher local taxes on petrol and diesel in India.
For example, according to the Indian government’s NITI Aaayog website, the price of Kerosene in Kolkata is INR 67.91 per liter while Diesel is INR 92.76 and Petrol is INR 106.03 per liter.
This means kerosene is cheaper by around INR 25 per liter compared to diesel in Kolkata and around INR 38 per liter cheaper compared to petrol. However, online websites offer kerosene at much cheaper prices than the official price in Kolkata.
As per data from NITI Aayog when compared nationally the average price of kerosene in metro cities in India is INR 36.90 compared to INR 92.72 for diesel and INR 102.92 for diesel.
This is INR 55.82 per liter cheaper for diesel and INR 65.72 per liter cheaper for petrol.
This is in addition to a long and well-documented history as well as current practices of fuel adulteration in India where fuel pumps there add cheaper kerosene to more expensive petrol and diesel to increase profit margins.
In 2016 the Indian Supreme Court, itself, observed that the practice of adulterating fuel is rampant in India.
The suspects
A source said that one of the main suspicions is on the fuel transporters who neither belongs to the oil companies in India or the oil dealers in Bhutan and ferry fuel from Siliguri to Phuentsholing or from Assam to Gelephu and Samdrupjongkhar.
Each of these Indian fuel trucks can carry 20,000 to 24,000 liters of fuel each.
While there is no hard evidence, there is a huge economic incentive to siphon hundreds if not thousands of liters of petrol and diesel from each truck, and replace it with cheap kerosene.
The siphoned petrol and diesel can then be sold in India where their price is much higher due to taxes.
For example, if a truck is carrying 24,000 liters of diesel then even if 1,000 liters is siphoned off and replaced with 1,000 liters of kerosene the difference in amount going by Kolkata prices is INR 25,000 illegal profit per truck or even higher if they can source cheaper kerosene from other India cities like Chennai where kerosene is INR 15 per liter.
A research paper titled “A New Method for Estimation of Automobile Fuel Adulteration” by Anil Kumar Gupta and R.K. Sharma from National Institute of Technology in Kurukshetra, India says the adulteration in India is usually above 10 percent to make it financially attractive and below 30 percent, as anything above this can spoil vehicles and be detected.
The source said that locks on quite a few these tankers coming in are not secure. The source pointed out that while Bhutan imports around Nu 14 billion of fuel from the oil companies, they are too big to risk their reputation by doing anything with the fuel from the source.
The fuel that comes to Bhutan via Siliguri comes from Kolkata in trains, and is then stored and distributed from there to Bhutan.
However, a Tashi BoD official in Phuentsholing said that in the last couple of years, things have become strict with the trucks with digital locks, GPS devices on them, etc. The same official said that if the truck measures are strict as stated above, another possibility is that the vehicle transporters are not the sole actors, and there could be others possibly colluding with them because the money to be made by adulterating fuel to Bhutan is worth a lot.
Even if a conservative 10 percent fuel adulteration is done, the money made will be between Nu 600 million to Nu 1 billion a year. If it is higher, the amount will be in the billions.
In Nepal, a research paper titled “Estimation of Petrol and Diesel Adulteration with Kerosene and Assessment of Usefulness of Selected Automobile Fuel Quality Test Parameters” by R. Yadav, K. Murthy V, D. Mishra and B. Baral from the Kathmandu University found diesel that is commercially dispensed at automotive fuel pump stations had 30 percent to 50 percent kerosene.
The scam in India
A 2008 Article by The Mint paper in India says that the fuel adulteration scam in India works in various ways. Most commonly, criminals pay employees of regional distribution centers to dilute diesel and gasoline with kerosene.
This cannot be ruled out in the case of Bhutan, as its fuel comes from regional distribution centers in Siliguri and Assam and while the main companies, themselves, are not involved, employees down the line working with unscrupulous elements cannot be ruled out.
The Mint article says in other cases, tankers are diverted to secret depots where kerosene and petrol are mixed, then shipped to 34,000 official gas stations, where most of the adulterated fuel is sold. Racketeers have to pry open and replace locks on fuel tankers.
Petrol an issue too
So far, the focus has only been on adulterating diesel fuel in Bhutan due to issues with Euro 6 diesel vehicles, but there is evidence emerging that even the petrol that is coming into Bhutan is adulterated.
A fuel dealer in Thimphu said that the Trade Department recently took a fuel sample of his petrol pump and informed him that the petrol’s sulphuric acid level should not be more than 9 to 10 but a level of 67 was found on testing.
Sulphuric acid in India is around INR 20 to 25 per liter.
This is not good, as adulterated fuel is ultimately bad for even petrol cars and wears out the engine and causes other problems.
Additives and vehicle impact
While kerosene is the prime suspect, other additives to Bhutanese fuel also cannot be ruled out.
A paper titled “Fuel Adulteration Consequences in India: A Review” by Amit P. Gawande and Jayant P. Kaware in the Scientific Review and Chemical Communications says apart from kerosene being mixed into petrol and diesel, there are also cheaper lubricants that can be used.
The paper says that according to the Anti Adulteration Cell of India, Naphtha is a commonly used adulterant for gasoline. The modus operandi is to import the product in huge quantity and divert it for adulteration.
It points to a case in Uttar Pradesh, in the city of Meerut, where an authorized transport company was caught with adulterated stock. The agency was supposedly using its workplace for adulterating diesel with kerosene.
As pointed above, a major concern has been the breakdown of Euro 6 diesel vehicles in India.
The same research paper says that fuel adulteration in India is an issue for foreign car manufacturers making a beeline to set up manufacturing facilities in the country, as their first and immediate concern is the quality of petrol that gets supplied to the users’ cars. They have uniformly found that supplies are heavily adulterated and particularly the Octane content is much lower than the specification value of 87 percent.
Fuel adulteration in Bhutan is not only an issue for the consumers being cheated, and damage caused to both diesel and petrol cars, but adulterated fuel is proven to produce more polluting and noxious fumes which is not good for the environment.
Equipment needed at border
Bhutan currently does not have the advanced equipment to test for fuel adulteration like kerosene. The Department of Trade (DoT) Director, Sonam T Dorji, said since there is no allocated budget, they are reaching out to a donor to secure Nu 11 to Nu 12 million to buy such equipment which can detect sulphur in the fuel, and place it at the POL Depot and Lab of Thingchupangkha near Chunzom.
The Tashi BoD official said that the testing facilities should not only be in Thingchupangkha, but should be along the border so that fuel tankers coming in from India can be tested on the spot.
On hindsight, fuel to Bhutan must always have been adulterated at various levels, and now, it is the breakdown of the more sensitive Euro 6 cars in Bhutan that maybe finally exposing the issue.
In recent times, the cheaper cost of fuel in Bhutan is also an incentive.
In terms of testing for adulterated fuel, Bhutan will really need to up its game as there are a variety of ways developed by the American Society for Testing and Materials International which are density test, evaporation test, distillation test, chemical marker test, gas chromatography. Now, even ultrasound is used to test the fuel quality.
Essentially, checks must be done within the country and also at the border.
The Trade Director said they had a meeting with vehicle and fuel dealers, and they were told that if they found any suspicious fuel then to call DoT which would come and take the sample.
The Director also said the principal oil companies have been contacted, and a meeting has been requested with their quality control officials in Bhutan.
Lyonpo says quality assurance in MoU
The Minister of Industry, Commerce and Employment, Namgyal Dorji, earlier said the Royal Government of Bhutan and Government of India has signed a MoU on Petroleum, Oil and Lubricants this year. One of the provisions of the MoU is on quality assurance.
To further ensure that only high-quality fuel is supplied in the market, the ministry is strengthening its collaboration with the principal oil companies in India in line with the MoU.
“We are in the process of arranging bilateral meetings with their quality control officials to validate fuel quality and develop future action plans for the petroleum sector in Bhutan,” Lyonpo Namgyal Dorji said.
He also said, “Additionally, we are committed to upgrading our testing facilities or exploring other options to comprehensively test all aspects of BS VI fuel on a periodic basis.”
Lyonpo said the ministry remains vigilant in ensuring the highest standards of fuel quality in Bhutan, and is taking all necessary steps in collaboration with stakeholders to address the relevant concerns related to Euro 6/BS 6 diesel vehicles.
“We appreciate the patience and cooperation of all vehicle owners and stakeholders, as we collectively work to address these issues,”Lyonpo said.
The Lab
Lyonpo said the fuel laboratory at Thinchupangkha near Chuzom is equipped to test most parameters of BS VI fuel specifications.
Earlier this year, DoT recruited a new chemist and a laboratory assistant following the resignation of the former chemist.
Both were trained at Indian Oil’s Laboratory in Siliguri in May 2024 and are qualified to conduct fuel testing as per BS VI standards, except for sulfur content.
The laboratory does not have specialized equipment to test sulfur content, and is looking at ways to purchase the equipment.
Regarding the Euro 6 diesel vehicles experiencing breakdowns, Lyonpo said it is not just the MoICE but also other relevant agencies like the Ministry of Energy and Natural Resources (MoENR) who are also actively looking into these related issues.
CCAA acts
The Competition and Consumer Affairs Authority (CCAA) under the MoICE received a total of 46 complaints in July 2024 of which 45 complaints pertained to frequent breakdown of certain BS4/BS6 vehicles due to issues related to engine oil compression and EGR (Exhaust Gas Recirculation) valves.
CCAA proactively facilitated the final mediation between the dealer and the complainants in August 2024.The key points of the mediation were to replace modified EGR valves free of charge to address the recurring breakdown issues.
The replacement work shall commence from November 2024 and is expected to be completed by January 2025. The replacement of modified EGR valves is expected to improve performance or resolve the likelihood of specific EGR issues. The dealer also agreed to deploy a service team to designated locations, outside the current service centers, to facilitate the replacement of the modified EGR valves. Further, the dealer agreed to provide the warranty period for additional 2 years/25,000 kms for the modified EGR.
Test reports
Earlier, this paper has received two lab reports that show fuel quality in Bhutan is not up to the mark.
The first report is from a Euro 6 Eicher DCM Jumbo Truck belonging to Gyalsung Infra, which had spoilt while plying through Assam in May 2023.
An independent third-party laboratory in Pune called Chem-Tech Laboratories tested the fuel in the tank, and in its report said the sample is highly contaminated with organic chloride causing corrosion and rust formation on fuel system components. It said, “The fuel is not recommended for use as it does not meet the requirements of BS 6 (same as Euro 6) diesel fuel as per standards of IS 1460 specifications for distillation recovery.”
The report found 2,343 milligrams of chlorine per kg of fuel when the maximum limit should be 1 milligram per kg.
Another issue is that the Distillation Recovery was 95 percent volume, recovered at 365 degrees centigrade when the maximum should be 360 degrees centigrade.
The second lab report was to do with a Toyota vehicle purchased by the RBG. The parts were sent to Japan where Toyota Industries Corporation carried out tests of both the equipment and fuel.
The test found the presence of chlorine and sulphur in the Exhaust Gas Recirculation (EGR) valve, especially in the area where there was a hole caused by corrosion.
The report said that chlorine dissolved in condensed water and formed hydrochloric acid leading to the corrosion.
The report says that that the chlorine entered the fuel through two ways. Either the fuel originally contained chlorine or an additive to the fuel contained chlorine.
The Toyota report says it faced the adding of chlorine to fuel to erase the green colour of kerosene in India. This simply means that when diesel is being adulterated by adding cheaper kerosene, then chlorine is added to disguise the colour of the kerosene.
