Rexjournal ISSN 2321-1067 Renewable Research Journal · PDF fileRexjournal ISSN 2321-1067...

Rexjournal ISSN 2321-1067 Renewable Research Journal

Rex Journal Volume 3 Issue 4 Page | 180

TITLE: ALTERNATE SOURCE OF LIGHTING TO KEROSENE FOR RURAL

HOUSEHOLDS

Dharmendra Makwani, Dr. Gopalkrishnan Purushthaman

Shri Jagdishprasad Jhabarmal Tibrewala University

Abstract

Kerosene dominates the domestic sector primarily for lighting purposes in India. The current

price of domestic kerosene and the subsidies on the same have led to a financial burden on

the Indian economy and under-recoveries for Oil Marketing Companies (OMCs). The

subsidies have also led corruption and black-marketing of kerosene in remote rural areas,

resulting in many households not having access to any source of lighting. The denial to the

‘Right to Light’ has been primarily due to the historical allocations and use of kerosene in

India and the big rural-urban divide and income divide besides other factors that influence

local marketing of kerosene. Thus the subsidies have benefitted only the richer sections of

society which has failed the basic factor of equity of the kerosene subsidy policy. This paper

tries to show the financial burden and under-recoveries of kerosene subsidies and differential

use of kerosene in India while trying to show the significance of renewable energy projects

like the ‘1 Million Solar Urja Lamp (SoUL)’ Project that aims to provide the ‘Right to Light’

to every child in India.

1. Introduction:

A large variety of energy sources have been used for industrial, commercial and domestic

purposes globally. Traditionally, the oldest sources of energy used for domestic purposes of

lighting, cooking and space heating are biomass products like firewood, animal and

agricultural wastes. After the discovery of refined kerosene from crude oil in the 19th century,

the ‘Miracle of Nature1-Kerosene’ came to be widely used as one of the major source of

energy for commercial, industrial and domestic purposes of lighting and cooking. Kerosene

continues to dominate the domestic sector especially for lighting in the developing and under-

developed countries where electricity has been a distant reality. The supply of kerosene is

often subsidized in the developing and under-developed countries in an attempt to widen its

use as a convenient fuel (Gangopadhyay et al 2005) and enable equitable access to all classes

of society.

This paper tries to examine the kerosene prices and subsidies leading to a fiscal burden for

the country and under-recoveries for Oil Marketing Companies (OMCs), the differential use

of kerosene in India and a solar lamp intervention that can be more productive for rural

household lighting.

The domestic sector is one of the largest consumers of primary energy in India (nearly 40%

of total energy demand), and traditional sources still dominate in the house-hold sector,

where 75% of energy requirements are met by fuel wood and agricultural waste; the rest is

1 Michael Pollan in his book ‘The Omnivore’s Dilemma: A natural history of four meals’, 2006, The Penguin

Press, referred to bio-fuels and other fossil fuels and its products as the ‘Miracle of Nature’



met by kerosene and liquefied petroleum gas (LPG)2. 68.84% of India’s population lives in

rural areas where 43.2% still use kerosene for lighting and 0.5% of rural households have no

access to lighting while 6.50% use kerosene for lighting in urban households (Census 2011).

Figure 1 shows the wide use of kerosene as a domestic fuel for lighting and cooking from

2006 to 2012. The usage in the commercial/industrial and other sectors has almost been

marginal thus indicating that kerosene has a high dependence and dominance only in the

domestic sector.

Figure 1 - Sector Wise Consumption of Kerosene (Million Tonnes- MT)

Source- Petroleum and Natural Gas Statistics 2012 Report

India imports most of its kerosene in order to meet the domestic kerosene demand. The

kerosene import peaked in 1998-1999 and then declined rapidly. The decline in the imports

is met with domestic production of kerosene in the country. Figure 2 shows the import and

domestic production of kerosene.

Figure 2 – Domestic Production and Import of Kerosene (Million Tonnes)

Source- Planning and Analysis Cell, Ministry of Petroleum and Natural Gas

India’s production of domestic kerosene has increased but at a decreasing rate to meet the

domestic demand primarily for rural household lighting.

2 Pohekar, S.D, Kumar,D & Ramachandran, M, 2005, ‘Dissemination of cooking energy alternatives in India- a

review’, Renewable and Sustainable Energy Reviews, 9, 379-393, retrieved from

http://www.sciencedirect.com/science/article/pii/S1364032104000632

2006-07 2007-08 2008-09 2009-10 2010-11 2011-2012

Domestic 9203 9163 9131 9101 8722 8045

Commercial/Industry 50 185 43 69 67 61

Others 159 17 128 134 139 123

Private Party Sales 93 0 0 0 0 0

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Production (000 MT)

Import (000 MT)

http://www.sciencedirect.com/science/article/pii/S1364032104000632



2. The Kerosene Pricing and Subsidy Debate

Globally, subsidies have been given on fossil fuels especially domestic fuels like kerosene for

poorer households to meet their lighting and cooking requirements. These subsidies are often

justified as instruments of redistribution in many developing countries, in part because of the

lack of broad-based institutions that enable direct cash transfer (Piketty and Qian, 2009) 3 or

access to grid connectivity.

The kerosene subsidy in India was initially established as a distribution scheme during fuel

shortages in World War II and after the war, the subsidy was maintained with the intention of

stabilizing prices and providing poor households with sufficient fuel for cooking and lighting

(Shenoy 2010). Subsidies are given for kerosene by the Ministry of Petroleum and Natural

Gas while the distribution is administered by the Ministry of Consumer Affairs, Food and

Public Distribution through the Food and Civil Supplies Authority in each state which is

finally given through the Public Distribution System (PDS). The OMCs import kerosene at

Rs. 47.31/- per litre and a subsidy of Rs. 0.82/- is given by the Central Government and thus

the final selling price of subsidized kerosene at the Public Distribution Shop (PDS) is Rs.

14.96/- which varies from state to state and across districts as it incorporates transportation

cost due to the distance factor. Thus in many remote villages, the subsidised price of kerosene

is Rs. 20/-. Chart 1 gives a diagrammatic representation of the hierarchical flow of kerosene

in India both administrative and subsidy wise.

Chart 1-Flow of Kerosene- India (Administrative and Subsidy Wise)

Source

3 Rao 2012

CENTRAL GOVERNMENT

MoPNG allocates state-wise

kerosene quotas

Fixes prices and subsidy

The Department of Food & Public

Distribution of the Ministry of

Consumer Affairs, Food and Public

Distribution administers the system

Refinery Gate/ Sea Port At Import

Parity Prices –

Rs. 47.31/-

Oil Marketing Companies At

Discounted

Prices- Rs.

14.96/-

(The retail

selling price

of PDS

kerosene

differs from

state to state

due to the

difference in

each state’s

tax

structure.

Within state

prices might

differ due to

transportatio

n costs

which are

passed on to

the

consumers)

Whole Sale Dealer Oil Co-ordination Committee makes

state-wise monthly allocation

FPSs/KODs/Retailers STATE GOVERNMENT

Food & Civil Supplies Authority of state

government allocates quotas to wholesaler and

retailer, supervises and monitors kerosene allocation

and distribution Ration Card Holders



Source - Rehman et al (2005) & TERI-IISD report (2012)

After World War II and Indian Independence, the subsidies for food and domestic fuel like

kerosene stayed as political pressure forced each government to increase the portion of

subsidy to fuels meant to achieve an equitable distribution of essential consumer goods to

people all across the country (Shenoy 2010).

The kerosene subsidies in India post World War II have varied based fluctuating global oil

prices and following price mechanisms:

From 1976-2002, petroleum product prices were fixed by the government-constituted

Oil Pricing Committee based on the Administered Pricing Mechanism (APM) where

the oil companies were guaranteed a minimum rate of return and kerosene was cross-

subsidized by higher-priced petrol, diesel and other products and OMCs were able to

earn a reasonable rate of return on assets employed (Shenoy 2010).

In 2002, the Government of India announced the dismantling of the APM in the

Petroleum Sector and a fixed per-unit fiscal subsidy on PDS kerosene was set at Rs.

0.82 per litre4. This subsidy is met through an oil pool mechanism5 to partially

compensate for gap on the subsidies given for diesel, kerosene and LPG as they form

almost two-thirds of the total petroleum product consumption in the country6. This

eventually led to the main scheme for kerosene subsidization in India7: ‘The PDS

Kerosene and domestic LPG Subsidy Scheme 2002’ coming into effect from 2003.

In 2003, the government started to once again intervene in fuel-pricing decisions

when crude oil prices rose above US $ 60 per barrel and disallowed a cost overtake

by the OMCs (Chaturvedi 2008). 8

However, despite changes in the pricing policies in respect to changes in global fuel prices,

the price of subsidised PDS kerosene has remained unchanged since March 20029 (Refer to

Annexure 1- Prices of Kerosene after subsidies). However, due to government intervention in

the subsidization of kerosene along with the prices of kerosene there has been a huge subsidy

burden on the nation. According to the International Energy Agency (IEA), India is among

the highest of the non-OECD subsidizers of energy consumption, with subsidies of over $10

billion per year, despite undertaking price reform of fossil fuel in the last decade (Rao 2012).

Since the government didn’t allow increases in domestic prices for PDS kerosene, residential

LPG, gasoline and diesel in line with the increasing international crude oil prices, the cost of

subsidies increased more than 100 per cent between 2005-06 and 2008-09 (Shenoy 2010).

4Fossil-Fuel Subsidy Reform in India: Cash Transfers for PDS kerosene and domestic LPG’, August 2012,

TERI-IISD, retrieved from http://www.iisd.org/gsi/sites/default/files/ffs_india_teri_rev.pdf 5http://petroleum.nic.in/subsidy.htm 6‘Fossil-Fuel Subsidy Reform in India: Cash Transfers for PDS kerosene and domestic LPG’, August 2012,

TERI-IISD, retrieved from http://www.iisd.org/gsi/sites/default/files/ffs_india_teri_rev.pdf 7 http://petroleum.nic.in/subsidy.htm- As per the scheme, a flat rate of subsidy per selling unit is to be given to

the Public Sector Oil Marketing Companies (OMCs) equal to the difference between the cost price and issue

price per selling unit as on 31/2/2002. The OMCs were to adjust the retail selling prices (RSP) of these products

in line with international prices. The amount of subsidy per selling unit is equal to the difference between the

cost price (Cost price for PDS kerosene for any depot has been calculated on import parity basis, taking into

account international prices prevailing during March 2002) and the issue price (issue Price means the invoice

price of the product ex-depot excluding state surcharge, excise duty, sales tax, local levies and delivery charges)

per selling unit and is computed ex-depot price for PDS Kerosene. The subsidy is to be phased out in 3-5 years

as decided by the Government after consultation between the Ministry of Petroleum and Natural Gas and the

Ministry of Finance 8 Shenoy 2010 9 http://petroleum.nic.in/subsidy.htm

http://www.iisd.org/gsi/sites/default/files/ffs_india_teri_rev.pdf


http://petroleum.nic.in/subsidy.htm-



Figure 3 shows the fiscal subsidy on kerosene. The total government subsidy bill on PDS

kerosene and Domestic LPG in 2011-12 was Rs. 30 billion (US$ 1.13 billion) and the

potential losses due to the 40% diversion of PDS kerosene at 2005-06 prices was Rs. 50

billion (US $ 1.13 billion).10

Figure 3 - Fiscal Subsidy on Kerosene

Source- Petroleum and NG Statistics 2012 Report

In addition to the government subsidy, the OMCs are sharing the burden of subsidizing PDS

Kerosene and the subsidy under the scheme is provided on the sales made by the participating

companies of kerosene under the PDS kerosene11.

Even though the fiscal subsidies are very small and on a decline as indicated in the above

graph, when compared with the gap between the selling and cost prices of the products12, the

under recoveries of the OMC have increased significantly. Figure 4 shows the under

recoveries to oil companies have grown which was Rs. 19485 crores in 2010-11 to Rs 27352

crores in 2011-12.

Figure 4 - Under Recoveries to Oil Companies

10 Fossil-Fuel Subsidy Reform in India: Cash Transfers for PDS kerosene and domestic LPG’, August 2012,

TERI-IISD, retrieved from http://www.iisd.org/gsi/sites/default/files/ffs_india_teri_rev.pdf 11 http://petroleum.nic.in/subsidy.htm 12‘Fossil-Fuel Subsidy Reform in India: Cash Transfers for PDS kerosene and domestic LPG’, August 2012,

TERI-IISD, retrieved from http://www.iisd.org/gsi/sites/default/files/ffs_india_teri_rev.pdf

0

500

1000

1500

2000

2500

3000

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Rs.

in

cro

res

Years


http://petroleum.nic.in/subsidy.htm




Source- Petroleum and NG Statistics 2012 Report

Several reforms has been attempted at in order to stabilize the increasing burden of the

subsidy on the fiscal exchequer. These reforms have failed due to the strong political pressure

to maintain the subsidies exerted by the poor who still have some access to the cheaper

kerosene and by the participants in the black market (Shenoy 2010). Due to the increasing

cost of subsidies on the government and OMCs, a number of expert committees (Chaturvedi

2008 and Parikh 2010) commissioned by the Indian government in the past have

recommended phasing out the kerosene subsidies and replacing them with alternative subsidy

mechanisms (Rao 2012). The Kirit Parikh Committee Report (2010) stated that since the

kerosene subsidy is going largely for lighting, the allocations should be reduced as more and

more Below Poverty Line (BPL) households are connected to the electricity grid.

In argument to the reduced subsidies, Gagopadhyay et al (2005) in their study state that

though kerosene subsidy is an inefficient means of subsidizing fuel use for the poor, the

impact of reducing energy subsidies and its welfare on the poor will be enormous as

reduction in the subsidies will need to be supported by other policies that would limit the

adverse impacts. The authors conclude by stating that subsidy is a good instrument for fuel

transition from biomass to fossil fuels as it reduces deforestation and indoor air pollution.

However, the Kirit Parikh Committee Report states the alternatives to biomass and the

subsidies of fossil fuel especially kerosene can be reduced by the development of LED lights,

LED lanterns using ordinary dry cells that provide an alternative to lighting in rural areas.

These technological advancements are at comparable costs to what households spend on

subsidized kerosene which provides better light and as manufacturers make these lanterns

available across the country, the need for kerosene for lighting will reduce.

Thus kerosene as a source of lighting and the subsidies on the same has been debated on the

following points:

The growing fiscal subsidies and under-recoveries are leading to a fiscal burden on

the national exchequer

Subsidies are an inefficient means of ensuring fuel and energy access

Subsidies have come to become permanent and lead to corruption (Shenoy 2010)

thus leading to households not receiving the desired quantity of subsidised kerosene

Reduction in subsidies will lead to many households not having access to any source

of lighting

0

5000

10000

15000

20000

25000

30000

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Ru

pee

s in

Cro

res

Years



According to the TERI-IISD Study, 2012, more than Rs. 5000 crore (US $ 1.13 billion) of

subsidies and under-recoveries were lost in 2005-2006 and assuming that all the PDS

kerosene diverted towards ‘non-household use’ was used for the adulteration of diesel, the

state government would have lost an additional Rs. 1021 crore (US $ 230.61 million) in

2005-06 as excise duties foregone.13 Thus approximately only 60% (Our Economic Bureau

2005) of subsidized kerosene reaches the PDS customers and the remainder is diverted to the

black market where the diversion of kerosene is a lucrative business for corrupt fuel

distributors who in turn, bribe government officials to obtain licenses to distribute or blend

the fuel and to maintain the subsidy policy (Shenoy 2010). On field studies and observations

conducted by the authors in the states of Madhya Pradesh and Maharashtra, show that the

black market prices of kerosene per litre are Rs. 40/-. Thus the basis on which the subsidy

policy of kerosene is based –‘Equitable Distribution’ remains a mere utopian dream of the

policy makers and a distant reality for kerosene users. The subsidy has led to wasteful use of

energy and a lucrative business for many, thus leaving a large majority of the population

without an access to a basic source of energy and denying many poor households the ‘Right

to Light’.

Thus this section looked at the subsidy and pricing issue in India has led to certain problems

of fiscal burden and recurring losses along with lack of transparency in the distribution of

kerosene. The next section will examine the differential use of kerosene in India with respect

to allocations and use of kerosene in India.

3. The Differential Use of Kerosene

Literature and data analysis show that kerosene distribution and access has been

differentiated on various grounds. This section tries to look at some of these features in detail.

State wise allotment and use of kerosene

Kerosene Allocations to states have been given on a historical basis. The quantity of PDS

Kerosene on which subsidy is allowed for each states are limited to the allocations made by

the Ministry of Petroleum and Natural Gas subject to actual quantities sold14. The allocation

of PDS kerosene to the consumer with a ration card depends on whether the consumer has

LPG connections and this allotment differs from state to state.

Thus we notice that allotments to states differ despite the fact that some states have higher

poverty levels and other socio-economic differences that classify them as backward. Figure 5

shows the top ten states with the highest allotment of kerosene from 2008-2012.

Figure 5- Allotment of kerosene

13 TERI-IISD 2012 14 http://petroleum.nic.in/subsidy.htm

http://petroleum.nic.in/subsidy.htm



Source- http://www.infraline.com/ong/petroproducts/SKO_PDS1.aspx

Similarly Figure 6 show the states with the highest Per Capita Allocations (PCA) from 2008-

09 till 2011-12

Figure 6- Per Capita Allocations

Source- http://www.infraline.com/ong/petroproducts/SKO_PDS1.aspx

The states and union territories shown in Figure 5 and 6 are relatively progressive compared

to the other backward states that don’t feature on this list thus indicating that the criteria of

allocations is more biased towards progressive states or states that may have good access to

other forms of energy. Thus the states with the highest usage of kerosene also depend on the

0

200000

400000

600000

800000

1000000

1200000

1400000

2011-12 2010-11 2009-10 2008-09

Mil

lio

n T

on

ns

Years

UP

Maharashtra

West Bengal

Bihar

Gujarat

Madhya Pradesh

Tamil Nadu

Karnataka

Andhra Pradesh

Rajasthan

0

5

10

15

20

25

Lit

res

per

per

son

States

2011-12

2010-11

2009-10

2008-09

http://www.infraline.com/ong/petroproducts/SKO_PDS1.aspx

http://www.infraline.com/ong/petroproducts/SKO_PDS1.aspx



allotment of kerosene. The following figures show the top ten states in the country where the

percentage use of kerosene for lighting and cooking in rural and urban households

respectively is the highest.

Figure 7- Percentage of Households using Kerosene for Lighting in Rural India

Source- 2011 Census, Provisional, Registrar General of India

Figure 8- Percentage of Households using Kerosene for Lighting in Urban India


0.002.004.006.008.00

10.00

Per

cen

tag

e

States

0.00

0.10

0.20

0.30

0.40

0.50

0.60

Per

cen

tag

e

States



Figure 9- Percentage of Households using Kerosene for cooking in rural India


Figure 10- Percentage of Households using Kerosene for cooking in urban India

0.00

0.02

0.04

0.06

0.08

0.10

0.12

Per

cen

tag

e

Years




Thus the use and allotment of kerosene shows a bias political and economic agenda of the

subsidy policy towards progressive states rather than states which are backward and remote.

Figures 7 and 8 show that backward and remote states like Orissa, Assam and Jharkhand have

a low percentage of households using kerosene for lighting compared to states like Uttar

Pradesh which is the highest. Similarly Figures 9 and 10 indicate that progressive states like

Tamil Nadu, Maharashtra and Gujarat have higher percentage of households using kerosene

for cooking than states like West Bengal, Rajasthan and Bihar. This allotment of kerosene

and its subsidy has led to various debates on the differential and undue use of kerosene. The

following points have been raised by researchers with respect to the same.

The historical basis of the allocations and usage by relatively richer states in the country

and low coverage for the poorer states in the country is noticed especially in the case of

kerosene used for cooking. The Chaturvedi Report 2008 stated that though there are large

increases in access to electricity, the allocation of kerosene has remained essentially the

same over the years. For example, 24% of rural kerosene consumption goes to states that

have achieved 100% electrification and thus presumably do not need the fuel for lighting

(Shenoy 2010).

The basis of subsidy allocation to the PDS card holder for cooking and lighting has been

also been contested by many. Rehman et al (2005) examined the issues of access and

availability of kerosene to rural masses and showed that the allocation of kerosene and its

subsidy is flawed in India where kerosene is given on the basis of the amount of cooking

fuel as household consumes (in the case of LPG) even though kerosene is used for

lighting. Thus the authors point out that a poorer household may have LPG for cooking

but no electricity for lighting and conclude that allocations should be based on a demand

basis or relative poverty levels of the states since in rural areas kerosene is mostly used

for lighting whereas in the urban areas it is largely used for cooking.

0.00

0.10

0.20

0.30

0.40

0.50

0.60P

erce

nta

ge

States



The rural-urban bias of kerosene subsidy allocations has been debated for a long time.

Gangopadhyay et al (2005) state in their paper that the subsidies for modern fossil fuels

are biased towards the urban sector especially in the case of kerosene and in spite of the

subsidies there has been a small shift from biomass in the rural areas. As kerosene

subsidy is regressive in rural areas and progressive in urban areas, data on kerosene

subsidies shows that urban sector receives a larger subsidy and the limited availability of

subsidized kerosene in rural areas is biased towards lighting than cooking (Gagopadhyay

et al 2005). Rao (2012) states that in urban areas, the coverage of the poor is relatively

low but the materiality of subsidies is higher and the black market purchases represent a

higher share of total consumption thus making subsidies progressive where their removal

could be costly for particular urban groups that have few alternative cooking fuels.

Thus the differential allotment and use of kerosene has led to certain issues on the following

points that have been debated by researchers and policy makers on why kerosene subsidies

have led to a differential allotment and usage patterns:

The basis of the historical allocations and use of kerosene in progressive states that

have access to other sources of energy.

The rural-urban divide and the class divide on the basis of income have show that

subsidies have benefited the richer sections of society thus raising an important

question on the equity basis of distribution of the kerosene subsidy policy.

3. Solar Lamp Intervention

The kerosene subsidy given for lighting and cooking and its differential use patterns and

irregular distribution to end users through the PDS have created opportunities for other

alternatives to be introduced in rural areas where energy access has been a major problem.

Alternate sources of energy like solar have been looked at globally in order to provide

suitable lighting to rural households. The 1 Million Solar Urja Lamps (SOUL) is one such

initiative started in India that looks at reducing the use of kerosene in rural areas through the

distribution of solar lamps to school children. The objectives of the project are particularly

aimed at

Addressing the energy security scenario in the country especially with relation to

increasing crude oil prices and decreasing fossil fuels resources that are used for

lighting.

Enhancing education among school children who can use the lamps to study during

the night

Localising the assembly, servicing and usage of solar products in rural areas.

A pilot project ‘One Child One Light’ was carried out in Khargone District, Madhya Pradesh

where 19009 lamps in 2012-2013. The pilot project led to a bigger impetus to spread the

‘Right to Light’ to 1 million children across India. The project aims at distributing 1 million

lamps over a period of two years across the country and the focus is on the backward states.

The ‘SOUL Project’ aims to address the following development challenges in the country:



1. Energy Access and Energy Security- 43.16% of India’s total rural households still depend

on kerosene for lighting (Census of India 2011) while 11 lakh households in India have

no source of lighting (Census of India 2011).

2. Education- Around 68.84% of India’s population resides in rural India (Census of India

2011) with 29.67% in the age group of 0-14 years. The use of solar lamps will guarantee

the ‘Right to Light’ to all children along with the Government of India’s proclaimed

motto on the ‘Right to Education’

3. Economy- Kerosene is a subsidised fuel in India creating a huge fiscal burden on the

Indian government with mounting under-recoveries for the Oil Marketing Companies.

The distribution of solar lamps will save the government foreign exchange and enhance

local livelihoods in the renewable sector

4. Environment- the uses of new forms of renewable energy like solar energy would help in

meeting environmental challenges faced by the country.

Project Innovations and Impacts

The innovations of the ‘SOUL Project’ are classified on the basis of cost and implementation

strategy which are described below:

The payback period of the lamp is estimated with respect to kerosene prices for each

household taken as 3 litres of kerosene per month at Rs. 18/- per litre. Thus taking the typical

cost of solar lamps and the relative payback period of the lamps with respect to kerosene, we

get the following diagram

Rs. 2000 /-

Rs 1000/-

Rs. 500/-

Rs. 250/-

40 months payback

20 months payback

10 months payback

5 months payback

2.5 months payback



Rs. 125/-

As seen in the pilot project of the ‘1 Million Project’ in Madhya Pradesh, the cost barrier in

the range of less than 3- 6 months is acceptable for a rural community. Thus the final

subsidised price of the lamps has been kept at Rs. 120/-

o Implementation Strategy

The implementation of the project looks primarily at the decentralisation of assembly, sale,

repair and maintenance appropriate for small power devices (as in the case of the lamp)

ensuring local control and retention of benefits at the local level. In order to address the

equity and access issue of energy sources, districts and talukas (Blocks) in selected states

have been selected on the parameters of ‘Doability’ (NGO presence, total population and

total schools) and ‘Social Need’ (ST and SC population, literacy rate and electrification of

households). The implementation process and feasibility will be monitored and evaluated by

a research component incorporated in the project where IIT-Bombay will be associating with

Academic Institutions to conduct the baseline, impact and feasibility studies throughout the

project.

The following chart shows the model of lamp distribution based on the above stated

parameters.

Chart 3- Model of Lamp Distribution

Thus the project is designed at three levels where IIT-Bombay will be facilitating and co-

ordinating institute of the project while local level Partner Institutes (NGOs) will work at

ground level to ensure effective and efficient lamp distribution and local Academic Institutes

will be used for monitoring and evaluation of lamp distribution.

The ‘SOUL project’ is estimated to have the following impacts:

o It will provide 3,00,000,000 extra study hours per year (Assuming one extra study hour

per day, for 300 days in a year15)

15 Report on the Study conducted by Project Team at the pilot project site in Madhya Pradesh, April-May 2013

Provides Solar Lamps

Empanelled Solar Study lamp kit supplier



o It will save nearly 36,000,000 litres of kerosene per year (Assuming 3

litres/month//family of kerosene16)

o It will save 1,00,000,000 kg of CO2 emissions (Assuming 1 litre of kerosene burning

emits about 2.5 kg of CO2)

o It will save US $ 26,000,000 of foreign exchange to the government (Assuming

government spends about Rs. 40 per litre to subsidize kerosene, assuming the US $ 1=

Rs. 5517)

o The project will invest US $ 162680 (Rs. 10 million) for training of local population to

enhance the localisation of the project

Conclusion

43.2% of India’s rural population still use kerosene for lighting while 0.5% has no access to

lighting (Census 2011). As seen in the above discussion on the kerosene prices and subsidies

that has led to a fiscal burden for the country and under-recoveries for OMCs along with not

achieving the purpose of equitable access and distribution leading to a differential use of the

resource among states and within rural and urban areas. Thus the 1 Million SoUL project

aims to address the ‘Right to Light’ to every child in a more practical and equitable approach.

The large scale national project and social endeavour has been built on objectives primarily

relating to the kerosene debate of subsidies, equity in distribution and access to better forms

of energy. It is observed and believed that the project will:

Try to ensure access to ensure light to remote rural areas that have depended solely on

kerosene for lighting purposes or don’t have access to energy for lighting whatsoever.

Thus the whole debate on kerosene subsidies, equity in allocations and distributions is

trying to be addressed by this large-scale project through the use of a cleaner and

alternate source of energy

Ensuring that education in rural areas is not disrupted due to inaccessibility of lighting

services is one of the noble objectives of the project. Thus the project has a twin

approach of addressing the education need as well as the lighting need of rural areas.

The concept of localisation of solar energy has been tried and tested in many parts of

the globe however, not on such a large scale. Thus employment generation and skill

development at local levels is going to be one of the key successes to the effective and

efficient implementation of the project

The project being carried out on such a large and massive scale is going to encounter

challenges related to:

Co-ordination with large number of stakeholders at different levels with respect to

common bottle-necks that all large projects encounter

Technical problems at ground level that many a times cannot be addressed due to the

factors of distance, time and local skill and knowledge to address new technology

alternatives.

16 According to the rules set by the Public Distribution System in India, Ministry of Consumer Affairs, Food and

Public Distribution, different card holders (distinguished on the basis on income) get different allocations of

kerosene per month. An average of 3 liters/month/family is taken in this case 17 http://ppac.org.in/writereaddata/Price%20Build%20up%20Sensitive%20Products.pdf

http://ppac.org.in/writereaddata/Price%20Build%20up%20Sensitive%20Products.pdf



The subsidy given to students for the lamps could be taken over by local vested

interests at all levels of the project.

The new concept of ‘Academic Social Responsibility’ has been applied to this project

where local academic institutes will be used as partners to monitor and evaluate the

project and carry on the later functioning of lamp distribution at local levels is a huge

task that requires co-ordination and support from many stakeholders to ensure that

monitoring and evaluation of the project is undertaken in an effective manner.

The success of the project will ensure that new forms of localised alternate energy gains an

entry to remote rural areas thus ensuring that the ‘Right to Light’ is accessible by all while it

is envisioned that the use of ‘Miracle of Nature-Kerosene’ is reduced by the entry of this

alternate source thus ensuring a reduced fiscal burden on the Indian exchequer while at the

same time making an easy and equitable access and distribution of localised energy forms.

References

Gangopadhyay, S., Ramaswami, B. & Wadhwa, W, 2005, ‘Reducing subsidies on

household fuels in India: how will it affect the poor?’ Energy Policy 33 (2005), 2326-

2336, Elsevier

Pohekar, S.D, Kumar, D & Ramachandran, M, 2004, ‘Dissemination of cooking energy

alternatives in India- a review’, Renewable and Sustainable Energy Reviews 9 (2005),

379-393

Pollan, M, 2006, The Omnivore’s Dilemma: A natural history of four meals, The Penguin

Press, USA

Rao, N.D, 2012, ‘Kerosene subsidies in India: When energy policy fails as social policy’,

Energy for Sustainable Development 16 (2012) 35-43, Elsevier, retrieved from

api.ning.com/files/.../Rao2012KeroseneSubsidiesinIndia.pdf

Rehman, I.H, Malhotra, P., Pal, C.R & Singh, P.B, 2005, ‘Availability of kerosene to

rural households: a case study from India’, Energy Policy 33 (2005), 2165-2174, Elsevier.

Shenoy, B.V, 2010, ‘Lessons learned from attempts to reform India’s Kerosene Subsidy’,

International Institute for Sustainable Development, Geneva, retrieved from

http://www.iisd.org/pdf/2010/lessons_india_kerosene_subsidy.pdf

Vishwanathan, B & Kumar, K.S.K, 2003, ‘Cooking fuel use patterns in India: 1983-

2000’, Energy Policy 33 (2005), 1921-1036, Elsevier

Kirit Parikh Committee Report on ‘A viable and Sustainable System of Pricing of

Petroleum Products’, Government of India, retrieved from

http://petroleum.nic.in/reportprice.pdf

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LPG’, August 2012, TERI-IISD, retrieved from


http://www.iisd.org/pdf/2010/lessons_india_kerosene_subsidy.pdf

http://petroleum.nic.in/reportprice.pdf




Annexure 1

Table - Prices of Kerosene (Rs/litre) after subsidies

Year Price (Rs./litre)

1989 2.25

1990 2.77

1991 2.52

1992 2.52

1993 2.52

1994 2.52

1995 2.52

1996 2.52

1997 2.52

1998 2.52

1999 2.52

March 2000 5.55

September 2000 8.35

November 2000 7.35

2001 7.35

2002 8.98

2003 9.01

2004 9.01

2005 9.08



2006 9.09

2007 9.16

2008 9.22

2009 9.22

2010 9.22

January 2011 12.32

June 2011 14.83

2012 14.96

2013 14.96

Source-http://in.reuters.com/article/2010/02/04/india-fuel-prices-idINSGE6130E720100204

http://in.reuters.com/article/2013/08/31/india-fuel-prices-idINL4N0GW05020130831

http://in.reuters.com/article/2010/02/04/india-fuel-prices-idINSGE6130E720100204

http://in.reuters.com/article/2013/08/31/india-fuel-prices-idINL4N0GW05020130831

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