Dinesh Divekar
Business Mentor, Consultant And Trainer
Saswatabanerjee
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Industrial Relations
Korgaonkar K A
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Deputy Manager - Hr
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Dear Experts,
We consume approximately 400 liters of Diesel for running our DG sets (320 KVA) per month. And we store 200 liters diesel in our premises.
Please advice is Petroleum Act is applicable to my organization. If so any please guide in adding this rule in Legal register
regards
Ismail Khan

Hi
Fire license from the fire services & rescue dept is suffice in this case. If you store more than 2000 liters in underground then you have to obtained an license from deputy controller - explosive dept which has its headquarters at nagpur and office/branch in all states.

Dear Christopher,
Thanks for your reply. Can you add some more details like how to convince an Auditor on this, I mean to ask what standard and clause I need to show about this 2000 L criteria.
Thanks,
Ismail Khan

Hi
If you have the Fire license for the storage of Diesel, no auditor will ask further on it. Your place doesnt fall under the explosive rules as the storage is only 200 liters and the same is stored on a barrel. Only clause here is you should have proper storage place with secondary containment. That's more than enough irrespective of any audits whether its ISO or SA or any third party audit.

Please refer to,the petroleum rules,
It specifies the minimum storage limit for each type of petroleum in the factory.
Diesel comes under class B (flash point between 27 and 65 degree) and no license is required for storage of less than 14000 liters. However, you need to follow the rest of the requirements of the rules about storage, handling and safety

Dear Ismail,
Legal compliance apart, my question is on maintaining inventory. If your monthly consumption is 400 Ltrs then your weekly consumption is 100 Ltrs. In that case why you store 200 Ltrs as safety stock? Why you need 50% safety stock?
Your reorder level should be 50 Ltrs and you should order 100 Ltrs per week. Therefore, the storage level of diesel should vary between 50 Ltrs to 150 Ltrs. If you reduce the stock level then your inventory cost will reduce by Rs (55 x 50 = ) 2,750 permanently (assuming that diesel price is Rs 55/Ltr).
Please think over my suggestion.
Thanks,
Dinesh V Divekar

Dear Dinesh, Thanks for cost saving suggestion. The reason for storing 400 Liters is our area Power supply is very uncertain so we keeping more stock. Regards, Ismail Khan
Dear Banerjee, Thanks for your reply. Can you please elaborate on rest of the requirements of the rules about storage, handling and safety of Diesel as per petroleum act. regards, ismail Khan
There are a whole set of rules governing everything related to storage.
Please check Petroleum Rule 2002
Or Google for petroleum rules 2002
You need to extract from that those parts which actually apply to your unit

Further to Mr. Dinesh, I would like to add the following line.
What is the capacity of the DG Set. It will be having 60 to 100 ltr. So, you need to have one more quantity of your tank capacity. If you do so, then you need not to think of any license or any other act or rule. You can think it over in this angle also.


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