India cuts windfall taxes on fuel exports as global prices fall

INDIA eliminated a levy on petrol exports and cut windfall taxes on other fuels less than 3 weeks after they were imposed, offering relief for the nation's No 1 fuel exporter Reliance Industries and top crude explorer Oil & Natural Gas.

New Delhi reduced the windfall tax on diesel and aviation fuel shipments by 2 rupees (S$0.04) a litre, and scrapped completely a 6-rupees-per-litre levy on petrol exports, according to a government notification. It also cut the tax on domestically produced crude by about 27 per cent to 17,000 rupees a ton. Bloomberg News first reported Thursday (Jul 14) that the government was considering lowering the taxes.

India imposed the taxes on Jul 1, joining a growing number of nations placing windfall levies to tap energy companies' booming profits. But international fuel prices have cooled since then, eroding profit margins at both oil producers and refiners.

International crude prices have slumped since mid-June on concerns about a potential global recession, at one point erasing all the gains that followed Russia's invasion of Ukraine. Returns from processing petrol and diesel in Asia have plunged in recent weeks, with industry consultant FGE expecting a further decline in margins this quarter due to increased supplies.

Reliance and Rosneft-backed Nayara Energy, India's only privately owned refiners, make up 80 to 85 per cent of India's overall petrol and diesel exports, according to FGE. BLOOMBERG