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CESS on Ad Valorem Might Bring Respite to Upstream Players

The oil ministry has agreed to the demand of oil producers to switch from a fixed cess on oil production to ad-valorem, which, if approved by the finance ministry, could help lower the duty oil producers such as Cairn India and ONGC pay. 

Source:  ET

SNP Insights

Amendment in CESS for O&G exploration, will bring breathing space for troubled upstream sector, as due to almost 60% decline in oil price profit margin of up stream players was dwindled. This new move might end the dis-proportionate taxation regime & boost investor spirit in up stream segment marginally. Biggest beneficiary would be Cairn Energy, Oil India Limited & ONGC. 

Source: SNP Infra Research