'Reliance SEZ export duty clarity key under govt's fuel tax overhaul'

Contributing sentiments towards policy:

55% : "OMCs benefit via reduction in marketing losses on petrol and diesel by Rs 10 per litre, the diesel export tax being offered as a discount on RTP (refinery transfer price), i.e., price at which OMCs buy diesel from standalone refiners to the extent of their shortfall (HPCL benefits more)," it said.
55% : Investec said despite steep export duties, refiners continue to earn healthy export margins of USD 15-25 per barrel, supported by strong diesel and ATF cracks (USD 65-70 a barrel), while weaker petrol cracks (USD 8-9) explain its exemption from the levy.
54% : However, it is not yet clear whether exports from Reliance's special economic zone (SEZ) refinery, which accounted for a large share of India's refined product exports, will continue to enjoy exemptions, as they did under the 2022 windfall tax regime, UK's Investec said in a note.
54% : With crude prices elevated, markets had expected a renewed levy, so this outcome removes a major overhang and supports a near-term trigger for ONGC and Oil India.
51% : On fuel export tax, it said, "A key uncertainty persists around whether Reliance's SEZ exports will continue to qualify for exemption, as they did under the 2022 regime; the resolution of this will be critical in determining the effective impact on Reliance's refining margins".
50% : "In FY25, 75 per cent of Reliance's diesel production and 35 per cent of its jet fuel production were from its SEZ refinery, which we believe, based on 2022 precedent, could be exempt from this tax.
49% : "If we therefore assume the export tax is applicable only on the non-SEZ volumes, the impact should be largely offset by still-elevated diesel/jet fuel cracks vs pre-conflict levels," it said.
47% : The applicability of newly reimposed export windfall taxes on shipments of diesel and ATF from Reliance Industries' SEZ refinery remains the key uncertainty, following India's fuel duty overhaul, with significant implications for refining margins and government revenues, according to analysts.
46% : Citi said the export taxes are equivalent to USD 36 per barrel on diesel and USD 50 per barrel on jet fuel.
46% : The government has not reintroduced a crude oil windfall tax on upstream producers - a key positive surprise.
42% : "That said, given the revenue pressures on both the government and OMCs, a reintroduction of some form of upstream levy cannot be ruled out.

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