Ethanol is a highly flammable liquid with a relatively low flash point (18°C (open cup). There is a concern that evaporating ethanol could pose an explosion hazard in bonded warehouses and in distillation rooms. A literature search indicated that explosions occur very rarely. The present study is based on an accidental leakage of ethanol during transfer from a road tanker to a static tank and it caught fire with sparks generated due to electrical faults. The major lessons learned from this accident, included: (a) designers and operators should always use explosion proof electrical equipment when handling flammables and (b) management must take the responsibility to adequately train their personnel who handle hazardous material. © 2007 American Institute of Chemical Engineers.