Private refiners were also making windfall gains by sourcing Russian oil at reduced rates and re-exporting it to other markets. File | Photo credit: The Hindu
The government has extended petroleum product export restrictions that require petroleum refiners to sell a significant portion of their export volumes domestically, according to a notification issued April 1 by the General Directorate of Foreign Trade. (DGFT).
These restrictions were first put in place in July 2022, alongside the lifting of windfall taxes on oil producers’ profits on crude oil, gasoline, diesel and aviation jet fuel (ATF), in a context of soaring international oil prices after Russia. – The Ukrainian conflict breaks out. Private refiners were also making windfall gains by sourcing Russian oil at reduced rates and re-exporting it to other markets.
Domestic oil producers sell their output to local refineries at international parity prices and were making windfall gains, and with gasoline, diesel exports “becoming very remunerative, some refiners have been seen to dry up their pumps in the market interior,” the finance ministry said. noted the ministry at the time.
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“The exporter is required to submit a self-declaration to the relevant customs authority at the time of export confirming that 50% of the quantity mentioned in the packing slip has been/will be supplied to the domestic market during the financial year concerned”, Opinion of the DGFT dated 1 April indicated. A slightly lower commitment of 30% of exports to supply the Indian market has been set for diesel exporters.
While exports to Bhutan and Nepal are excluded from outbound shipment calculations under this standard, wholly export-oriented units as well as companies located in special economic zones have also been excluded from these quantitative restrictions.
“These exporters are also required to file a quarterly statement with the Ministry of Petroleum and Natural Gas,” according to the DGFT notification, which does not specify an expiry date for these provisions.
At the retail level, Indian gasoline and diesel prices have remained frozen since May 2022, when the government reduced excise duties on the two fuels amid high global oil prices. Global prices have declined from last year’s highs and have been between $75 and $80 a barrel in recent weeks.
According to an estimate by JM Financial Limited, with oil prices at $75 per barrel, Indian oil marketing companies are making a profit of ₹11.1 per liter of diesel and ₹8.7 per liter of gasoline in the current retail prices.