Oil and gas company share rises upto 11% as government cut windfall tax
- The government reduced the windfall tax on domestic crude oil production to Rs 17,000/tonne
- The government also cut the additional excise duty on diesel and ATF exports by Rs 2/litre
- Oil India rose 8% to Rs 201.80, CPCL increased 11% to Rs 296.40, ONGC surged 7% to Rs 136.40
Oil and gas company shares rose up to 11% on the BSE in intraday trade on Wednesday after the government reduced the windfall tax on domestic crude oil production from Rs 23,250/tonne to Rs 17,000/tonne. The government also cut the additional excise duty on diesel and ATF exports by Rs 2/litre, while the additional excise duty on petrol has been withdrawn.
Oil India rose 8% to Rs 201.80, Chennai Petroleum Corporation (CPCL) increased 11% to Rs 296.40, and Oil and Natural Gas Corporation (ONGC) increased 7% to Rs 136.40.
On the BSE in early trade today, Mangalore Refinery & Petrochemicals (MRPL) remained locked in the 5% upper circuit at Rs 76.30, Gail (India) jumped 5% to Rs 147.30, and Reliance Industries gained 4% to Rs 2,545
At 11:38 a.m., the S&P BSE Sensex was up 1.37% at 55,518.60 points.
Most oil and gas equities had fallen by far to 45% from their 52-week highs in June when the government levied a windfall tax and increased excise duty on diesel, petrol, and ATF exports.
"Post some moderation in product cracks in July, the government has reduced excise duty on fuel exports. This will benefit the refining companies. The new changes in excise duty will come into effect from July 20. Windfall tax has been reduced from ~US$ 40/bbl to ~US$ 29/bbl taking into account the recent trend in global oil prices. Reduction in windfall tax augurs well for oil producing companies", ICICI Securities said.
“While in absolute terms, the windfall taxes are still high, we believe steady normalisation in local fuel availability (a key energy security concern for the government), stability in oil prices, more normalised global fuel margins and currency stability will help further reduction in windfall taxes under the fortnightly review,” said analysts at Morgan Stanley.