As the price of crude oil declines globally, the government lowers the windfall tax on fuel exports

• Image Credit: Internet

• Jul 20, 2022 | Kabir Chakraborty

 As a result of increased supplies, returns from processing gasoline and diesel in Asia have fallen precipitously in recent weeks, and industry consultant FGE anticipates a further reduction in margins this quarter.

Digital Desk: Less than
three weeks after they were implemented, India removed a tax on gasoline
exports and reduced windfall levies on other fuels, providing relief for the
country's biggest crude explorer Oil & Natural Gas Corp. and No. 1 fuel
exporter Ltd.

According to a government
statement, New Delhi has totally eliminated the Rs 6-per-liter fee on gasoline
exports and lowered the windfall tax on diesel and aviation fuel shipments by
Rs 2 per litre. Additionally, it reduced the tax on crude that is produced
domestically by around 27%, to Rs 17,000 per tonne. The news that the
government was thinking about cutting taxes was first published by Bloomberg on
Thursday.

On July 1, India implemented
the levies, joining an increasing number of other countries that have done the
same to capture the expanding earnings of the energy sector. However, since
then, global gasoline prices have fallen, reducing profit margins for both oil
producers and refiners.

Concerns over a future
global recession have caused a decline in international crude prices since
mid-June, at one time wiping out all the gains made after Russia's invasion of
Ukraine. As a result of increased supplies, returns from processing gasoline
and diesel in Asia have fallen precipitously in recent weeks, and industry
consultant FGE anticipates a further reduction in margins this quarter.

Reliance and Rosneft-backed
Nayara Energy Ltd., India’s only privately owned refiners, make up 80% to 85%
of India’s overall gasoline and diesel exports, according to FGE.