Is Storing Diesel for Your DG Sets Compliant with the Petroleum Act? Seeking Guidance

Dear Experts,

We consume approximately 400 liters of diesel for running our DG sets (320 KVA) per month, and we store 200 liters of diesel on our premises.

Please advise if the Petroleum Act is applicable to my organization. If so, kindly guide me on adding this rule to the Legal register.

Regards,
Ismail Khan

A fire license from the Fire Services & Rescue Department is sufficient in this case. If you store more than 2000 liters underground, you must obtain a license from the Deputy Controller - Explosive Department, which is headquartered in Nagpur and has offices/branches in all states.

Thank you.

Thank you for your reply. Could you please provide more details on how to convince an auditor regarding this issue? Specifically, I would like to know which standard and clause I need to reference regarding the 2000 L criteria.

Thank you,

Regards,
Ismail Khan

Hi, if you have the Fire license for the storage of Diesel, no auditor will ask further about it. Your place doesn't fall under the explosive rules as the storage is only 200 liters and the same is stored in a barrel. The only requirement here is that you should have a proper storage place with secondary containment. That's more than enough, regardless of any audits, whether it's ISO, SA, or any third-party audit.

Petroleum Storage Guidelines

Please refer to the petroleum rules. They specify the minimum storage limit for each type of petroleum in the factory. Diesel falls under Class B (flash point between 27 and 65 degrees), and no license is required for storage of less than 14,000 liters. However, you need to follow the rest of the requirements of the rules regarding storage, handling, and safety.

Dear Ismail, Legal compliance aside, my question pertains to maintaining inventory. If your monthly consumption is 400 liters, then your weekly consumption would be 100 liters. In that scenario, why do you store 200 liters as safety stock? Why is a 50% safety stock necessary?

Your reorder level should be 50 liters, and you should order 100 liters per week. Consequently, the diesel storage level should range from 50 liters to 150 liters. By reducing the stock level, your inventory cost will permanently decrease by Rs 2,750 (assuming a diesel price of Rs 55 per liter).

Please consider my suggestion.

Thanks,
Dinesh V Divekar

Thank you for the cost-saving suggestion. The reason for storing 400 liters is that our area's power supply is very uncertain, so we keep more stock.

Regards,
Ismail Khan

[QUOTE=saswatabanerjee;2186732] Please refer to the petroleum rules. It specifies the minimum storage limit for each type of petroleum in the factory. Diesel falls under class B (flash point between 27 and 65 degrees), and no license is required for storage of less than 14,000 liters. However, you need to comply with the rest of the requirements of the rules regarding storage, handling, and safety.

Thanks for your reply. Can you please elaborate on the rest of the requirements of the rules regarding storage, handling, and safety of Diesel as per the Petroleum Act?

Regards,
Ismail Khan

There is 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.

Considerations for DG Set Capacity

What is the capacity of the DG Set? It will have a capacity of 60 to 100 liters. Therefore, you need to have a tank capacity for one more quantity. By doing so, you will not need to worry about obtaining any licenses or complying with any other regulations. You can also consider it from this perspective.

Dear Ismail ji,
Our learned members, Shri. Christopher and Shri. Saswata, have given you the answer to your query correctly. There is no need for a license from the Explosive Department, as stated by both the said learned members. Also, note what Shri. Saswata has rightly said: you need to follow the rest of the requirements of the rules regarding storage, handling, and safety.

Compliance with Local Regulations
Apart from compliance under the Petroleum Act/Rules or the Explosive Act/Rules, you need to comply with provisions under the Local Body Act, such as the Municipal Act, in respect to trade/use and storage of material, fire protection, etc., to my knowledge. We, the HR Fraternity, are not experts in this subject. You need to appoint a consultant who deals with such types of jobs.

Regards.

Furthermore, you need to obtain permission for the use of a D.G. Set under the Electricity Supply Act, 1948.

Thank you.

Thank you for the expertise. I am working on complying with the storage and handling requirements for petroleum. Also, thank you for the reminder about obtaining permission for the use of the DG set.

Regards,
Ismail Khan

As per me, for the use of DG, a No Objection Certificate (NOC) is required from the Electricity Department. Please check with your state authorities.

Dear ADMINHARIDWAR,

Please read my post #12 above, in which it is stated that one needs to take permission under the Electricity Supply Act of 1948 for the use of a DG set.

What does this mean? Is the NOC from the Electricity Department different from the permission required under the Electricity Supply Act of 1948?

I believe <a href="http://www.noavard.co">Health and Nutrition</a> are very important parameters in a job. A fire license from the fire services & rescue department is sufficient in this case. If you store more than 2000 liters underground, then you have to obtain a license from the Deputy Controller - Explosive Department, which has its headquarters in Nagpur and offices/branches in all states.

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