India has now cut the windfall tax offering relief to companies like Reliance Industries (RIL) and ONGC, just a few weeks after had imposing a imposing a windfall tax on oil exports of producers and refiners on July 1. In the last three weeks, Brent crude oil prices trended lower to $97/bbl before recovering to the current levels $106/bbl. The government cut the windfall tax on diesel and aviation fuel shipments by INR 2/liter ($0.02) and removed a INR 6/liter ($0.07) levy on gasoline exports. Tax on crude oil produced from domestic fields were slashed by 27% to INR 17k/ton ($212.8). Industry consultant FGE notes that returns from processing gasoline and diesel in Asia have decreased in recent weeks and it expects a further downtrend in margins this quarter due to increased supplies. As per FGE, private players such as RIL and Rosneft-backed Nayara Energy Ltd have 80-85% share in India’s gasoline and diesel export. The reduction in these export taxes are expected to provide some relief to these companies.
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