Increase in excise duty will not impact credit profiles of OMCs - India Ratings

New Delhi, November 13, 2014: India Ratings & Research (Ind-Ra) believes that the increase in excise duty on petrol and diesel will be moderated if petrol/diesel prices are further slashed, later this week, as expected. Retail prices will likely remain at around the same levels or increase only marginally once the excise increase and expected price cut take effect. The increase in excise duty is clearly driven by the continued soft crude prices which have given room to the government to increase the excise without impacting the retail prices. So far the government had been passing on the benefit of the soft crude to the consumer through successive cuts in retail prices of fuel. Since there are no longer any under recoveries on account of diesel and petrol and both items have been de-regulated, this excise increase and the expected price cut are likely to be neutral for the credit profiles of the oil marketing companies.

(Source: Manager - Corporate Communications and Investor Relations, India Ratings & Research-A Fitch Group Company, Mumbai.)

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