Manufacturer to Track Half a Million Gas Cylinders

By Dave Friedlos

Sept. 19, 2008—Hindustan Petroleum Corporation Ltd. (HPCL) is employing RFID to track a half million gas cylinders from the point of manufacture to delivery to consumers. HPCL, which has about 25 million domestic customers and 40 million liquid petroleum gas (LPG) cylinders currently in circulation, had signed a $2.2 million deal with IBM to design and deploy an RFID pilot to track 500,000 cylinders shipped from its manufacturing plant in Nashik.

The pilot, believed to be one of the largest rollouts of RFID in India, aims to automate the bottling and distribution process while also preventing the illegal diversion of gas cylinders to commercial operations. In India, gas cylinders are subsidized for domestic use in homes, says Nipun Mehrotra, VP and general manager of global technology services for IBM India.

"The government subsidizes the cylinders for domestic use, and this subsidy is worth as much as 300 rupees ($6.50) each," Mehrotra says. "What HPCL discovered was that some gas cylinders were finding their way to commercial operations." Gas cylinders intended for cooking use in domestic households were instead being diverted to restaurants, because domestic cylinders cost just 304 rupees ($6.56), compared with 700 rupees ($15.10) for commercial businesses.

"HPCL wanted to stop the diversions, which are a drain on government revenue," Mehrotra says. "The Indian government has also issued an advisory to petroleum companies to tag and track gas cylinders to protect the subsidy. So there is encouragement from the government to use RFID, and HPCL is staying one step ahead of the game and ahead of its competitors."

IBM is supplying passive low-frequency (LF) half-duplex (HDX) tags that will be attached to 500,000 cylinders originating at HPCL's Nashik manufacturing plant, and RFID interrogators will be placed throughout the supply chain.

The system will be used to monitor the cylinders as they are transferred from the manufacturing plant to the bottling facility, then on to the distribution warehouse, where they are dispatched to customers. "It will track the movement of cylinders from end to end," Mehrotra says, "and in this way, HPCL can be sure the cylinders are only used for domestic use. Once the cylinders are empty, they can also be traced back to the bottling plant."