The Root Cause

The World Bank Report of 2000 and several other reports have shown that kerosene is principally used to adulterate diesel on account of the price differences between the two fuels. Facts on ground at least in Nigeria tend to give some credence to this.

As stated in one of our articles, diesel market is a completely deregulated market and the pump price as at now range between N140-N160. Kerosene or DPK market on the other hand is classified as regulated. Kerosene happens to be the major cooking fuel to millions of Nigerian families and many also use it to light up their homes. The official price of kerosene, according to Nigerian National Petroleum Corporation (NNPC) officials, is N50 per litre.  In August 2013, NNPC, through the Pipelines and Products Marketing Company (PPMC), confirmed that it supplies between 10 and 11 million litres of kerosene daily which is distributed through licensed marketers as against the 8 million litres said to be the national daily consumption level. With this arrangement, the ideal expectation would be to have an overwhelmingly inexhaustible and cheap kerosene market. But alas, this is not so. Rather, kerosene has never sold for less than N120 per litre, both in and out of season (except at the very few NNPC mega stations where it sells for N50 per litre regulated price). Sometimes, it costs between N150 and N200 per litre. Now add to that the fact that the product has been in perpetual scarcity. One could not but wonder where the excess supply filters into.

Adulteration of diesel product has been generally fingered as a major conduit through which much of the imported kerosene escapes. In what appears to be a disturbing revelation, the Standards Organisation of Nigeria (SON) in 2012 (following a pilot study of samples taken from 21 filling stations) disclosed that virtually all the diesel on sale at the various filling stations in the country may be adulterated with kerosene and other substances. The rate of adulteration with kerosene is put at between 15% and 65%!

Adulteration has been principally fuelled by the fact that subsidized kerosene is much cheaper than diesel and ineffective enforcement means kerosene subsidies are not well targeted and the fuel is widely accessible. The retail price of diesel on the other hand has increased by several manifolds, resulting in a greater price differential; a very conducive basis for increased adulteration.

How it’s done: A Grand Conspiracy

The opportunity for adulteration occurs at three points along the diesel product supply chain:

– Refinery/wholesale outlets or storage facilities

– Retail outlets (Filling Stations). It must be stated that the Standard Organisation of Nigeria is of the opinion that most of the adulteration of petroleum products takes place between the depots and the filling stations

– By consumers. Some unscrupulous drivers are reported to have been caught in this act.

As a first step, kerosene and diesel are procured at depots with tankers. An average tanker’s calibrated content is between 30,000-33,000 litres. They are then transported to the ‘illegal refinery’ where the mixture takes place directly into an empty tanker as the case may be.

End products are classified into Grades 1, 2 and 3 and the profit margin graduates accordingly with Grade 1 being the costliest while grade three entails the least production cost but attracts the highest gain. Grade one may be prepared with 22,000 litres of diesel mixed with 11,000 litres of kerosene while grade two is a mixture of 11,000 litres of diesel, 22,000 litres of kerosene and some drops of engine and black oil. Grade three is produced from 33,000 litres of kerosene with a significant quantity of black and engine oil, all mixed together.

However, the conspiracy does not end there. Additional findings revealed that it extends as far as retail station where an insider is always on standby to collaborate on a fixed financial settlement basis to allow tankers discharge their adulterated cargo into underground tanks without the required test and analysis. In the conspiracy circle, it was gathered that the Station Manager and one or two persons sometimes form the core conspirators. At times, adulterated product even emanate from unusual places like the oil products depot itself. Besides, middlemen and filling stations also adulterate the products when it gets to them.

Consequences of contaminated/adulterated diesel fuel

Diesel fuel adulteration has grown into a major industry within our business space to the extent that it has been christened with its own special local identity: Rice & Beans Diesel. Rice and beans will easily pass for the most popular staple foods in Nigeria and they mix very well too. Hence such christening could probably be intended to drive home the growing popularity of the malaise and the ease with which the mixture is generated. Many truckers have paid expensively for the maniacal greed of a few petroleum marketers bent on maximising returns at any cost with little care for the damage it inflicts on highly priced equipments of many businesses and human life.

Adulteration of diesel fuel, which is currently a very flourishing business in our country, represents the major cause of the following:

– Malfunctioning of vehicle engine, rapid engine wear and tear, failure of components such as fuel filters, injector system, nozzles, turbo charger etc. and other associated critical parts. The problem gets further magnified for high performance modern engines

– Leakages and increased tailpipe emissions of hydrocarbons (HC), carbon monoxide (CO), oxides of nitrogen (NOx), particulate matter (PM) which can also cause increased emissions of air toxin substances

– Health problems in the form of increased tailpipe emissions of harmful & sometimes carcinogenic pollutants

Measures to guide against diesel fuel contamination

While we agree that there is virtually little that any individual trucker can do about the growing profile of ‘Rice & Beans’ diesel in our environment, there is much more that one can do to insulate one’s haulage business against all manners of contamination.

The most important key to dealing with fuel contamination is ensuring your fuel is kept “clean and dry” and free of damaging particles. In order to achieve this, all major fuel suppliers and engine manufacturers will tell you the first step is “good housekeeping”.

Achieving the above is not rocket science. It entails giving detailed and painstaking attention to a number of measures and ensuring they become entrenched in the company’s standard of operation (SOPs). We list some of these measures below:

– Where possible purchase fuel from reliable sources

– Discourage arbitrary purchase of diesel by drivers in transit for whatever reason

– Ensure you equip your procurement or maintenance or fleet management department unit with a handy diesel quality testing kit. While a more comprehensive diesel quality testing may warrant bringing in core professionals, in the interim, one can make do with the readily available off-the-shelve kits for random testing of every bulk diesel supply received. Several kits for carrying out various quality tests ranging from microbial, bug, water, particulate and kerosene contamination are available either locally or by direct purchase over the web.

– Ensure your fuel tanks are regularly maintained and leak-free. This will keep it free of bacteria growths, sediments or rusts which are common sources of diesel contamination.

– Identify and strictly follow recommended tank refilling methods

– Store fuel in a cool place where possible. Diesel fuel should be stored under clean, cool, dry conditions. Translucent plastic or fiberglass tanks should not be used above ground as light promotes the formation of gums and varnish. (If water is present algae growth may also occur). The storage tank should be tested frequently for water and any free water should be drained off.

– Bulk fuel tanks should always be kept full to minimize “breathing” which results in condensation, a product of humidity acting on water

– Filter fuel whenever it is moved

– Employ an ‘on-tank’ filtration (or fuel polishing) system to remove water and other contamination.

– You may want to consider the use of fuel additives to prevent fuel oxidation and a fuel biocide to minimize microbial growth

– If guaranteeing the quality of the fuel being used in your plant seem too cumbersome for your company to implement, then appropriate fuel conditioning equipment should be fitted onto the engine.

– To kill existing diesel bug a fuel biocide can be used. It is an effective diesel bug treatment in fuel tanks and can be used to kill bacteria in diesel by applying a large “shock dose”, and then prevent it from re-growing by applying smaller doses.

– Water/Fuel Separators are also available which remove free water and particulate contaminants before they get to the engine.

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