The kerosene, meant for public distribution system, was being taken to Dadaralundi from Bada Kodanda in a vehicle when it was seized yesterday.
"We have arrested the driver Khirod Pradhan. Efforts are on to nab the main culprit, who was to collect the kerosene," said IIC of Bhanjanagar police station A K Sahu.
Three other persons -- Narayan Panigrahi, Sadanand Sahu and Simadri Pradhan, were arrested at Patapur.
They had allegedly adulterated the diesel by mixing kerosene in it.