Reliance, ONGC shares crash as govt imposes export, windfall tax

Reliance Industries and ONGC shares crashed on Friday (July 1) after the Centre imposed export taxes on petrol, and diesel to boost supply within the country.

The Centre imposed a windfall tax on oil companies which were benefitting from the rise in demand due to rising global crude prices. Oil refiners like Reliance Industries and Rosneft-backed Nayara Energy were making profits by shipping oil to areas like Europe and the US, against the backdrop of the Ukraine-Russia crisis. Export taxes have also been announced on gasoline, diesel, and jet fuel.

Thus, the Nifty Energy index was in red on Friday, as it fell over four per cent, its sharpest drop since mid-May.

Also Read: Centre allows crude oil sales in domestic markets

Reliance Industries Limited (RIL), India’s most valuable company, shed $19.35 billion in market value as its stock plunged as much as 8.7 per cent, marking its biggest intraday slide since November 2, 2020, reported Reuters.

On the BSE index, RIL’s stock ended seven per cent lower at Rs. 2,408.95 per share.

State-owned oil producer ONGC plummeted 13.4 per cent, its biggest slide since the pandemic. Oil India slid more than 15 per cent, while Mangalore Refinery and Petrochemical slumped 10 per cent. Chennai Petroleum Corporation fell more than 5 per cent and Hindustan Oil Exploration Company stock declined over 3 per cent, stated a report by NDTV.

Also Read: Ukraine fallout: Russia pips Saudi as India’s second largest oil seller

The tax on crude oil alone will fetch the government Rs. 67,425 crore per year on every 29 million tonne of crude oil produced domestically. The aim is to restore domestic gasoline supplies at gas stations.

Also Read: Indias Russian oil imports jump 50 times; now accounts for 10% of all import: official