New Delhi
The windfall taxes imposed by the government on domestic crude oil production and fuel exports will hit ONGC’s earnings severely while shaving off up to USD 12 per barrel in refining margins for Reliance Industries Ltd.
The new levies will give the government up to Rs 1.3 lakh crore additional revenue, brokerages said.
In a surprise move, the government increased import duties on gold (by 5 per cent), added export duties on petrol and ATF and diesel and slapped a windfall tax on domestic crude production.
This follows earlier duties imposed on steel and iron ore .
While the export tax will be applicable on only-for-exports refinery of Reliance Industries (RIL), the restriction on product exports wherein at least 30-50 per cent is first supplied domestically will not apply to SEZ units.
UBS estimated that the government can raise Rs 1.38 lakh crore annually from additional taxes. “Based on diesel and gasoline export volumes in past year and estimate for FY23, we estimate additional revenues of Rs 68,000 crore on three transportation fuels. Similarly, windfall taxes on crude can raise Rs 70,000 crore in additional revenues.”
Goldman Sachs said it saw limited earnings risk for RIL as the spot implied GRM run rate is over USD 27 per barrel.
HSBC said while the new tax will lower ONGC earnings by Rs 30 per share, its impact on RIL would be Rs 36 a share.
“We continue to believe the loss on its domestic marketing margin is still greater than the export tax, and thus, we believe RIL is likely to continue to export significant amounts,” HSBC said.
