The Bhutanese Leading the way.
Lack of adequate storage capacity in the Petroleum Retail Outlets (PROs) appears to be the biggest problem leading to shortage in fuel supply.
According to a recent report by Competition & Consumer Affairs Authority (CCAA), it revealed that despite a significant increase in the number of vehicles and industries, storage capacity has not kept pace with the rising demand for fuel.
The report revealed that while the number of vehicles has increased from 75,190 in 2014 to 126,501 in 2023, the national fuel storage capacity has not proportionately grown
This has led to delays in restocking fuel at PROs, with some locations taking three to five days to receive fuel due to distance from the source. On the average 52 percent of PROs are able to restock fuel within a day or two while 42 percent PROs claim their ability to restock within a day after fuel shortage occurs.
Restocking time depends on the distance from source. PROs located in areas bordering India, such as Phuentsholing, Gelephu and Samdrup Jongkhar, are able to restock much faster than those located in the interiors.
According to PROs, the shortage stems from factors such as delays in supply and limited onsite storage capacity.
Other factors are transportation issues, such as road blocks, due to sudden increase in demand and lack of space to install additional UG tanks.
The most frequent shortages occur in urban areas, like Thimphu and Phuentsholing regions, emphasizing the need to increase storage capacity in these locations for reliable supply.
As per Section 124.4, Trade and Industry Rules 2023, all PROs are mandated to maintain a minimum stocks. However, according to ROICEs, who monitor stocks, some fail continually to maintain that.
The report further suggests that relevant government agencies must mandate distributors to strengthen their total storage capacity to cater to recurrent shortfalls due to various reasons, and more so to cover for shortfalls during monsoon where frequent roadblocks over prolonged periods severely disrupt supply.
67 percent of the PROs rarely faced any shortage of fuel during the last six months, while 4 percent faced shortages daily or several times a week. Only 8 percent had no shortage issue.
When comparing between distributors, it was evident that distributors that operate, a greater number of PROs experience more shortages on the average. This is expected since PROs operate in more remoter parts where distance is farther from source and transportation is more expensive.
Thimphu region experienced the most frequent from daily to several days a week shortage, while 18.75 percent of the PROs in Phuentsholing region had a weekly shortage occurrence.
The frequent shortages in Thimphu and Phuentsholing regions can be attributed to failure to meet the higher demand consistently, which is due to greater number of vehicles and industries.
PROs at Samdrup Jongkhar and Trongsa regions never or very rarely faced fuel shortage during the period.
CCAA report suggested that the dealers must also pay attention to remittance of payment to principal companies in time to prevent supply delays, since this is also considered as one of the reasons.
Further the report suggests that planning ahead is critical to ensure delivery schedules do not coincide with days when principal companies or banks are closed or ordering in larger quantities before monsoon or by avoiding delivery during festive periods when transportation might be delayed.
“Ensuring a reliable fuel supply at all times is an important socio-economic consideration to be made by the government. As an important dependent country, adequate fuel stocks have to be maintained both by the government and the private sector. Private dealers have to invest more to expand storage capacity. Supply and demand forecasting would also mitigate shortage during different times of the year,” the report states.
The four authorized dealers Bhutan Oil Distributor (BOD/ BOC), Druk Petroleum Corporation Ltd. (DPCL), Damchen Petroleum Distributor (DPD) and State Trading Corporation of Bhutan Ltd. (STCBL), currently operate 69 PROs across the country.
The Indian Oil Corporation Limited (IOCL), the Bharat Petroleum Corporation Limited (BPCL) and the Hindustan Petroleum Corporation Ltd. (HPCL) are the 3 principal companies that export fuel to the country.
The fuel supply into Bhutan is fairly simple. It begins with the Principal Companies delivering fuel to border towns Phuentsholing, Gelephu and Samdrup Jongkhar using their own tankers.
Once the fuel reaches the border towns, following border clearance protocol, fuel enter in the country and is either transshipped immediately or transferred into the authorized distributors storage tanks.
The fuel is then distributed to different PROs based on demand.
