The government of India has today increased the export duty on petrol, diesel, and ATF, a move that could help meet domestic demand. Export duty on petrol has been raised by Rs 6 per litre and Rs 13 per litre on diesel. Export duty on ATF has been upped by Rs 6 per lire. It must be noted that an increase in export duty on the various fuels will not increase domestic fuel prices. The government has also directed exported to sell 50% of their petrol in domestic markets and 30% of diesel as well. The move will also help the government’s kitty as it looks to benefit from the rising crude oil prices.
Further, another notification from the government showed it has slapped a Rs 23,230 per tonne additional tax on domestically produced crude oil to take away windfall gains accruing to producers from high international oil prices. “Crude prices have risen sharply in recent months. The domestic crude producers sell crude to domestic refineries at international parity prices. As a result, domestic crude producers are making windfall gains. Taking this into account, a cess of Rs 23,250 per tonne has been imposed on crude. Import of crude would not be subject to this cess,” the government said. Small producers, whose annual production of crude in the preceding financial year is less than two million barrels will be exempted from paying the cess.
The tax on exports is an attempt to benefit from the high crude oil prices while private sector refineries reap huge gains from exporting fuel to markets such as Europe and the US. The tax on domestically produced crude oil follows local producers reaping windfall gains from the surge in international oil prices. The government also noted that as crude oil prices are rising, refiners export fuel products at globally prevailing prices, which are very high. “As exports are becoming highly remunerative, it has been seen that certain refiners are drying out their pumps in the domestic market.”
Domestic petrol and diesel prices have been steady since May 21 when the government announced a cut in prices. Domestic prices are likely to remain low as the taxes announced today by the government do not impact domestic fuel prices.
With curbs in place for domestic oil refineries from export oil now, shares of private and public refining companies were seen tumbling with Reliance Industries stock falling more than 5%.