Shares of Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd. and Hindustan Petroleum Corporation Ltd. fell on Friday after the government reduced excise duty on petrol and diesel. BPCL dropped as much as 1.1%, HPCL declined up to 1.1%, and IOCL fell as much as 2.2% in trade.
The government cut the special additional excise duty on petrol to Rs 3 per litre from Rs 13 per litre and reduced the duty on diesel to nil from Rs 10 per litre, according to a gazette notification issued by the Department of Revenue late on Thursday.
The move comes as global crude oil prices have risen over the past month, leading to higher fuel prices worldwide. India consumes about 17,000 crore litres of petrol and diesel each year, and the duty cut is expected to reduce government revenue by about Rs 1.7 lakh crore. This equals nearly 5% of the central government's gross revenue, based on estimates cited by analysts tracked by NDTV Profit.
Data compiled by NDTV Profit showed that the total excise duty on petrol has been reduced to Rs 11.9 per litre from Rs 21.9 per litre, while duty on diesel has been cut to Rs 7.8 per litre from Rs 17.8 per litre, reflecting changes in special additional excise duty and other components.
OMC Share Price Today
The excise duty reduction aims to limit losses for oil marketing companies on fuel sales, even if the benefit is not fully passed on to consumers. According to Nomura, the blended marketing margin loss stands at Rs 48.8 per litre. The change is expected to reduce losses on petrol and diesel sales and support company margins.
Union Petroleum and Natural Gas Minister Hardeep Singh Puri said global crude prices have increased sharply in recent weeks. “International crude prices have gone through the roof in the last 1 month from around 70 dollars/barrel to around 122 dollars/barrel. Consequently, petrol and diesel prices for consumers have gone up all over the world,” he said in a post on X.
He added that fuel prices have risen across regions. “Prices have increased by around 30%-50% in South East Asian countries, 30% in North American countries, 20% in Europe and 50% in African countries,” Puri said.
Puri said the government reduced taxes to limit losses for oil companies. “The government has taken a huge hit on its taxation revenues to ensure very high losses of oil companies (approximately Rs 24/litre for petrol and Rs 30/litre for diesel) at this time of sky high international prices are reduced,” he said.
He also said an export tax has been imposed as global fuel prices surged. “Any refinery exporting to foreign nations will have to pay export tax,” Puri said.
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