Refining and oil drilling shares hit the skids after government govt levies tax on crude production, fuel exports

Shares of export focussed oil refiners were left in the lurch on Friday after the government imposed taxes on windfall gains they were making thanks to rising refining margins.

Media reports said the government imposed Rs 6 per litre special additional excise duty on export of air turbine fuels (ATFs) and diesel exports, while levying Rs 5/litre duty on petrol. The Centre also imposed additional taxes on local oil drillers at the rate of Rs 23,259 per tonne, CNBC Tv-18 said citing the Finance Ministry.

The decision led to a bloodbath in the petroleum block on Dalal Street. Reliance Industries, which has the largest refinery in the world in Jamnagar, slumped 7 per cent to trade at Rs 2,400 level. It single handedly took the market down as well. At the height of the selling, the stock eroded Rs 1.2 lakh crore of shareholders' wealth.

Mangalore Refinery and Chennai Petroleum were also down about 8 per cent each. Both stocks had gained recently thanks to the improving outlook on exports of petroleum products. ONGC and Vedanta that have oil rigs in India were down 5 per cent each.