Oil and Gas: Higher duties and cess to increase petrol and diesel prices
Jul 05, 2019 09:05 PM | Source: capitalmarket.com
Budget Provisions
- Increased special additional excise duty on petrol by Re 1 per litre from Rs 7 per litre to Rs 8 per litre
- Increased special additional excise duty on Diesel by Re 1 per litre from Rs 1 per litre to Rs 2 per litre
- Increased road and infrastructure cess on the Petrol and Diesel by Re 1 per litre from Rs 8 per litre to Rs 9 per litre
- Levied Re 1 per tonne customs duty on crude oil. At present, the government does not levy any customs duty on crude oil. Only a Rs 50 per tonne national calamity contingent duty (NCCD) is charged.
- The oil and gas industry has received as Rs 37000 crore as subsidies where Rs 33000 crore is earmarked as the LPG subsidy and the remaining Rs 4000 crore is to be given as the kerosene subsidy.
- Incentives towards the manufacturing of EVs
Stock to Watch
Reliance Industries, ONGC, Cairn India, Oil India, Indian oil, BPCL, HPCL, GAIL, Gujarat Gas, Indraprastha Gas, Gujarat state Petronet
Budget Impact
Prices of petrol and diesel are to increase by Rs 2 per litre due to higher duties which shall increase working capital (debt) for oil marketing companies.
The government has increased the fuel subsidy by 50.9%. Within the subsidy, the allocation towards the LPG subsidy has increased by 62.9%. This augurs well for the industry as the number of LPG connections will increase and the distribution network of OMCs will widen
Although in short run higher incentive to electric vehicles does not have impact on OMCs but in the long run increase in EVs is to lead to a negative impact of OMCs sales of petrol and diesel