RIL, MPRL, Chennai Petrochem tank up to 13% as govt raises excise duty on fuel

New Delhi: Shares of oil refining and marketing companies tumbled sharply in Friday's session after the Ministry of Finance increased export duties on select petroleum products and announced additional windfall tax on gains made by domestic refineries.

The finance ministry issued a notice on Friday, increasing export duties on petrol, diesel and aviation turbine fuel (ATF). The government imposed a cess of Rs 23,250 per barrel on domestic crude production. Export duty and new tax will dent earnings of refiners like Reliance Industries and Nayara Energy, part-owned by Russian oil major Rosneft, MRPL and oil producers Oil and Natural Gas Corp, Oil India and Vedanta, said a Reuters report.

Following the development, oil-to-telecom behemoth Reliance Industries shares tanked about 9 per cent to Rs 2369.45, before making some recovery.

Shares of Chennai Petrochem plunged 13 per cent to Rs 272.70, whereas Mangalore Refinery & Petrochem (MPRL) dropped 8 per cent to Rs 83.20.

Oil marketing firms including Indian Oil and Hindustan Petroleum were trading mildly lower, whereas Bharat Petroleum bucked the trend to gain marginally.

Small players such as Omnipotent Industries plunged about 15 per cent. Continental Petroleums and Sanmit Infra also shed up to 4 per cent.

Government has changed the export policy of petrol and diesel. Indian exporters will have to sell 50 per cent petrol in the domestic market on the total shipping bill.

According to the sources, crude oil producers made a windfall profit of $45-47 per barrel because of elevated crude oil prices in the international markets and domestic producers were selling the same at parity.

The government clarified that the move would not push the prices of petroleum products in India but will ensure the availability of products with the nation.

The government has raised export duty on diesel by Rs 13 per litre, on petrol by Rs 6 per litre and on ATF by Re 1 per litre. Producers with a production of less than 2 million barrels are exempted from this duty, the notification said.

According to a report from ET NOW, India's 28 per cent domestic crude oil production is exported, including Reliance Industries' export-oriented unit. "However, this unit might be exempted from the new norms," added ET NOW citing Bloomberg.

The impact on Reliance Industries could be much lower than what the Street is anticipating, providing some cushion to the shareholders of India's largest conglomerate. Also, the gross refining margins (GRMs) of refineries have dropped sharply to $16-17 per barrel from $30 per barrel earlier. The impact would not be steeply significant.

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