Authentix Fuel Marking Program for India 2005-2008

Authentix thrives in supply and distribution chain complexity, providing innovative authentication solutions that help you effectively mitigate risks to promote revenue growth and competitive advantage. As the authority in authentication since 1998, Authentix’s extensive, proven experience in public and private sector authentication solutions ensures the programs implemented for our customers are comprehensive, technologically advanced and professionally executed.

Prior engagements include a program for India from 2005 to 2008 that we want to present so that decisions are based upon technical and operational facts about the program. In 2005, the Indian Oil Ministry (IOM) embarked on putting a fuel marking program in place to combat the illicit practice of using subsidized kerosene to dilute taxed vehicle fuel across the country.

An Indian news story about the initiative can be seen here.

Criminals would divert or steal kerosene that was being subsidized by the government to benefit the poor, and use the lower cost kerosene to adulterate diesel fuel, costing the government millions in abused subsidies and evaded fuel taxes.

Five companies competed against the challenging capability, scope and experience requirements that the Indian government set forth to address the problem.

• Authentix was the only contender that could detect 1% kerosene in gasoline or diesel.
• Authentix was also the only company with a solution that met the operational requirements to be able to rapidly and economically inspect, audit and reconcile 34,000 retail outlets and terminals.
• Authentix and our operations partner, Societe Generale de Surveillance also met the requirements of frequent reporting to the Oil Marketing Companies (OMCs) and had experience executing similar programs and reporting in equally challenging environments.

The program identified over 1,000 retail outlets that were selling road fuel adulterated with kerosene – 543 in the first year alone. Word of inspections and prosecution spread quickly and for every site identified there were likely many more that stopped adulterating out of fear of getting caught.

The original contract was for a one-year trial, starting in October 2006, and based on the positive results was extended multiple times, the last extension expiring December 2008.

During the 27 months of the engagement, groups that were being disadvantaged by the fuel marking were continually raising issues to try and stop the program. One of these issues was the potential for laundering, or removing the fuel marker through industrial filtering processes. The IOM set up a committee to look into the issue but found no evidence of wide-spread laundering in the country. Even so, because the issue had been elevated by multiple competitors, the IOM chose to consider different marker technologies at the next contract renewal.

Separately, in 2008 two employees of Hindustan Petroleum Company Limited (HPCL) made a formal complaint to the Central Bureau of Investigation (CBI) in India about irregularities in the fuel marking program. These employees requested but were denied whistleblower status by the Chief Vigilance Commissioner. A short time thereafter, both employees were dismissed under allegations of misconduct. The CBI investigated the allegations and found no evidence to support the claims and the inquiry was closed.

One HPCL ex-employee took his story to the media, which ran video and text stories without doing any fact checking with either the IOM or Authentix. This gentleman has since become a self-styled activist which has led to other items by and about him on the Internet.

Subsequently in 2010, the IOM issued a tender for a new fuel marking program and multiple companies submitted proposals. Authentix responded with a layered marker and analyzer technology that addressed the issue of launderability. Another set of rigorous tests were conducted, but no contract was awarded.

India Program Timeline