The Centre has significantly hiked export duties on diesel as well as aviation turbine fuel (ATF). In doing so, the government has focused on increasing the levy on those private refineries that have been making profits from rising international prices despite the lack of sufficient domestic supplies. For diesel exports, the export duty has been doubled to ₹55.50 per litre from ₹21.50.
A notification was released by the finance ministry on Saturday, stating that the revised levies will come into effect immediately due to prevailing circumstances that require urgent intervention.
Move aimed at ensuring domestic supply
However, the imposition of this tax was not the first time the government had applied such measures. Previously, the government introduced the same measure on March 27, citing the need to maintain adequate availability of fuel within the country amid the ongoing conflict in West Asia. With global oil prices rising, exports became significantly more profitable than domestic sales, prompting refiners to divert supplies overseas.
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This latest hike seeks to discourage such export-driven strategies and stabilise domestic availability.
Private refiners shift focus to exports
Private fuel sellers, with losses incurred from the internal sales, started exporting their fuel products where the profit margin was much higher. State-owned oil selling firms maintained prices constant on the internal market, thus causing huge under recoveries.
As per the official press release by the Petroleum Ministry released on April 2, losses for public sector enterprises stood at Rs. 24.40 per litre of petrol and Rs. 104.99 per liter of diesel. Exporting, however, proved more profitable compared to other operations.
This caused private players to hike up prices or restrict the sale of fuel at home.
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ATF price volatility adds pressure
ATF prices also saw sharp fluctuations. On April 1, state-run oil companies initially increased ATF prices for domestic airlines by over 114 per cent in Delhi, before moderating the hike later in the day to ease the impact on airfares. The revised price stood at ₹1,04,927 per kilolitre for domestic carriers.
The increase in export duties by the government takes place amid such an environment of price instability and shortage issues, as it tries to reconcile between its domestic demands and international market conditions.
