- India has cut the windfall tax on petroleum crude to zero from 4,100 rupees ($50.13) per tonne, effective May 16, according to a government notification.
- Besides ONGC and Oil India, other upstream companies’ shares like Mangalore Refinery and Petrochemicals Limited (MRPL) and Chennai Petroleum shall also be in the spotlight.
- Shares of upstream companies rose up to 4 percent during Tuesday’s session on the BSE. MRPL and Chennai Petro were up between 3-4 percent. while ONCG and Oil India shares grew more than 1.5 and 2.5 percent.
India has cut the windfall tax on petroleum crude to zero from 4,100 rupees ($50.13) per tonne, effective May 16, according to a government notification. It left the windfall tax on petrol, diesel, and aviation turbine fuel (ATF) unchanged at zero.
The government levies a windfall tax on specific industries when they experience unexpected and above-average profits. Here, windfall refers to a dramatic and unanticipated increase in profits.
India last July had imposed the windfall tax on crude oil producers and extended the levy on exports of gasoline, diesel, and ATF after private refiners wanted to make gains from robust refining margins in overseas markets.
Stocks such as Oil and Natural Gas Corporation and Oil India – oil exploration and production companies – will be in focus after the government slashed the windfall tax on petroleum crude to zero while keeping petrol, diesel, and air turbine fuel (ATF) prices unchanged. Besides ONGC and Oil India, other upstream companies’ shares like Mangalore Refinery and Petrochemicals Limited (MRPL) and Chennai Petroleum shall also be in the spotlight today.
Shares of upstream companies rose up to 4 percent during Tuesday’s session on the BSE. MRPL and Chennai Petro were up between 3-4 percent. while ONCG and Oil India shares grew more than 1.5 and 2.5 percent, respectively, today in the early morning session.
On May 1, 2023, the windfall tax on petroleum crude was lowered to Rs 4,100 per tonne from Rs 6,400 per tonne. Rising global crude oil prices are seen as positive for domestic oil producers such as ONGC and Oil India. In this regard, the central government last year in July began imposing the windfall tax on crude oil producers, and the same was levied on exports of gasoline, diesel, and ATF after private refiners were making profits from robust refining margins in overseas markets.
The crude oil prices in international markets are currently hovering around $75 per barrel. On Monday, Brent crude futures rose $1.06, or 1.4 percent to settle at $75.23 a barrel, while US West Texas Intermediate crude settled at $71.11 a barrel, up $1.07, or 1.5 percent.
Last week, oil benchmarks fell for a fourth consecutive week, the longest streak of weekly declines since September 2022, over fears of a US recession and risks of a historic default on government debt in early June, according to a Reuters report.
On a year-to-date basis, ONGC shares have gained 10 percent, while Oil India shares have surged almost 21 percent. In the last six months, ONGC jumped nearly 17 percent and Oil India grew by 27 percent.
