The increase in excise duties on petrol and diesel is expected to result in a drop in the marketing margins of state-run oil marketing companies (OMCs) including Bharat Petroleum Corp. Ltd, Hindustan Petroleum Corp. Ltd and Indian Oil Corp. Ltd (IOC). OMCs are likely to absorb the higher taxes.
On Tuesday night, the government raised excise duty on petrol and diesel by ₹10-13 per litre. “This would mean a plunge in gross auto fuel marketing margin by 64% ( ₹12.1 per litre) from ₹19 per litre on 5 May to ₹6.9 a litre on 6 May,” said analysts at ICICI Securities Ltd in a report on 6 May.
Before the tax hikes, the OMCs were estimated to be clocking substantially high marketing margins.
