The Petroleum and Natural Gas Ministry is currently in discussions with the Finance Ministry for a review of the long-term windfall tax, Petroleum Secretary Pankaj Jain said on Thursday. He also said oil marketing companies (OMCs) will consider a cut in pump prices of petrol and diesel if global crude oil prices remain low for an extended period.
Speaking on the sidelines of the International Conference on Green Hydrogen, Jain said the recent fall in global crude prices has necessitated the review of the windfall tax in a move which may provide relief to companies.
“There is a calculation mechanism for that, and it is from the Revenue Department. We are in continuous discussions with the Revenue Department. The final decision will be with the Revenue Department,” he said. Jain expects no windfall tax to be put on refined fuels in the short term if product cracks stay low.
Classified as the Special Additional Excise Duty (SAED), windfall tax is levied on domestically produced crude oil and the export of diesel, petrol, and jet fuel (ATF). The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks. As on August 30, the windfall tax on domestically produced crude oil was reduced to Rs 1,850 per tonne, down from Rs 2,100 per tonne earlier. The tax has climbed down from Rs 7,000 per tonne in end-July.
Conversely, the windfall tax on diesel and aviation turbine fuel (ATF) exports remains unchanged at zero.
Pump prices
On retail fuel prices, Jain said the Ministry is analysing the fall in global prices and studying for how long they may remain low. “It would not be appropriate to cut (retail prices) by following the developments in just a week. We need time to analyse this trend for a longer duration,” Jain said.
Global crude prices have fallen every month since April, when they breached the $90 per barrel level. Earlier this week, benchmark Brent crude futures prices fell to a 33-month low of $69 per barrel over weak demand and concerns of oversupply. On Thursday, Brent crude futures stood at $71.3 per barrel.
Global prices may be impacted in the short term as OPEC is set to take a call on the ongoing 2.2 million barrels per day production cuts by member nations in December. Another set of cuts totalling 1.65 million barrels per day, announced in April 2023, has been extended until the end of 2025.
Jain said India wants the production to rise as there is demand, and will welcome a production rise.
First Published: Sep 12 2024 | 6:50 PM IST
