The fuel reserve everyone trusts, and nobody counts

A hospital, a data centre and a plant all build redundancy into every system they depend on. Then they store the fuel for that redundancy in barrels. 

Critical facilities are designed around the assumption that mains power will fail. Generators are specified, tested and maintained to the hour. The fuel that runs them is ordered by phone. 

Backup for the backup

The PPAC study conducted by Nielsen placed gensets at 4.06 per cent of India's diesel consumption, with mobile towers adding a further 1.54 per cent. The later CRISIL study for PPAC recorded power generation at 1.6 per cent of retail diesel sales across 2020 and 2021, a figure that understates the sector precisely because large DG users buy in bulk, outside the retail channel. 

Facilities of this kind do not treat fuel as a supply question. A data centre will hold reserve for at least a fortnight and keep a backup for the backup. A hospital running modern diagnostic equipment cannot let a machine power down at all, because the repair cost of an unplanned shutdown dwarfs the fuel bill that prevented it. 

The size of the reserve is a matter of policy. The accuracy of that reserve, in most cases, is a matter of trust. 

The cost of getting fuel to something that cannot move 

A DG set cannot be driven to a pump. Fuel has to come to it, and how it comes is where the cost sits. 

In practice that means barrels collected from a nearby pump, or an unregulated bowser arriving on site. Practitioners report ad hoc costs of 40 to 50 per cent on top of the fuel itself once manpower, spillage and pilferage are counted. Typical time to arrange a refill runs to one or two hours, longer for remote locations. 

Which is manageable, until it is not. One manufacturing plant lost four to five days of production after an outage found its fuel arrangement wanting. Nothing about the generator failed. The fuel simply was not there. 

What sitting fuel does

Adulteration is the slow version of the same problem. Kerosene blending has fallen sharply since the price gap closed, but practitioners estimate that 3 to 5 per cent of fuel in circulation is still adulterated somewhere along the chain for easy margin. 

The damage is never immediate. It surfaces months later as maintenance on an engine that should not have needed it. By then the delivery, the supplier and the day it arrived have gone unrecorded. 

Between 2015-16 and 2018-19, oil marketing companies terminated 40 dealerships for proven adulteration, alongside nine categories of control ranging from tamper proof locking on tank trucks to third party audits. Those controls are built around the retail outlet. They largely stop where bulk delivery to a site begins. 

This is unorganised fuelling

The generator is specified to the kilowatt and serviced to the hour. The fuel that runs it is ordered by phone, delivered in a barrel, measured with a rod and recorded on paper. 

A backup system is only as reliable as its least measured component. 

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Sources 

• Press Information Bureau, Government of India. Sector-wise consumption of petrol and diesel, based on the PPAC study conducted by Nielsen (India) Pvt Ltd. 

• Petroleum Planning and Analysis Cell. All-India Study on Sectoral Demand for Petrol and Diesel, conducted by CRISIL Risk and Infrastructure Solutions, October 2020 to September 2021. 

• Press Information Bureau, Government of India. Steps to Curb Fuel Adulteration, 2019. Dealership terminations for proven adulteration: 12 in 2015-16, 10 in 2016-17, 13 in 2017-18 and 5 in 2018-19. 

• Ad hoc cost, refill time and adulteration percentages are drawn from Repos practitioner interviews and are presented as field estimates, not published statistics