CAIRN OFFERS TO FORGO $500 MN IF INDIA AGREES TO PAY PRINCIPAL
NEW DELHI: The UK’s Cairn Energy Plc has offered to forgo $500 million and invest that amount in any oil and gas or renewable energy project identified by the Indian government if New Delhi agrees to honour an international arbitration award and returns the value of loss it incurred because of being taxed retrospectively, people familiar with the matter said.
The Scottish firm invested in the oil and gas sector in India in 1994 and a decade later it made a huge oil discovery in Rajasthan. In 2006- 07, it listed its Indian assets on BSE. Five years after that the government passed a retroactive tax law and billed Cairn ₹10,247 crore plus interest and penalty for the reorganisation tied to the flotation. The state then expropriated and liquidated Cairn’s remaining shares in the Indian entity, seized dividends and withheld tax refunds to recover a part of the demand.
Cairn challenged the move before an arbitration tribunal in The Hague, which in December awarded it $1.2 billion (over ₹8,800 crore) plus costs and interest, which totals $1.725 million (₹ 12,600 crore) as of December 2020.
The company has in talks with finance ministry officials offered to forgo the interest and cost, totalling over $500 million and invest that sum in any oil and gas or renewable energy project identified by Indian government if the principal of $1.2 billion due to it is paid, three sources with knowledge of the matter said.
The Indian government, which appointed one of the three arbitrators on The Hague panel and fully participated in the arbitration proceedings since 2015, wanted Cairn to settle the issue through its nowclosed tax dispute resolution scheme, Vivad se Vishwas.