New Delhi: Lauding New Delhi’s “bold” move regarding enactment of a legislation to cancel a 2012 policy, UK-based firm Cairn Energy PLC has stated it will drop litigations to seize the Indian properties in nations after getting a refund of USD 1 billion.
Cairn CEO Simon Thomson said the offer to return money seized to enforce retrospective tax demand in lieu of dropping all litigations against the government “is acceptable to us”.
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Thomson said Cairn will drop cases to seize diplomatic apartments in Paris and Air India airplanes in the US in “a matter of a couple of days” after the refund.
“Some of our core shareholders like BlackRock and Franklin Templeton agree (to this). Our view is supported by our core shareholders (that) on balance it is better to accept and move on and be pragmatic. Rather than continue with something negative for all parties which could last for many years,” he told PTI in an interview from London.
The 2012 legislation was used to levy a cumulative of Rs 1.10 lakh crore of tax on 17 entities.
Earlier last month, the government enacted a new legislation to drop Rs 1.1 lakh crore in outstanding claims against multinationals. About Rs 8,100 crore collected from companies under the scrapped tax provision are to be refunded if the firms agreed to drop outstanding litigation, including claims for interest and penalties. Of this, Rs 7,900 crore is due only to Cairn.
“Once we get to final resolution, part of that resolution is us dropping everything in terms of litigation. We can do that within a very short period of time, just a matter of a couple of days or something,” said Thomson.
“So we are preparing on the basis of getting this resolution quickly, all these cases being dropped and putting all this behind,” he added.
The firm, which gave India its biggest onland oil discovery, in its half-yearly report on Tuesday said it will return up to USD 700 million out of the Rs 7,900 crore (USD 1.06 billion) it is supposed to get from the Indian government to “shareholders via special dividend and buyback”.
Stating Cairn has had a “good, open and transparent line of communications with the Government of India” on finding a resolution to the retro tax issue, Thomson said: “Our aim was to get to a resolution... something which would be acceptable to our shareholders.”
“The intention of the government, we are obviously aligned with it, is to get this resolved as quickly as possible. Hopefully, that means within the next few weeks. It is good not only for us and our shareholders but also importantly for India," he added.
Referring to the prolific oil discovery the firm made in Barmer, Thomson said: "We are keen to get back to Cairn being talked about in terms of success in Rajasthan. I think moving on from this will allow us to do that.”
Cairn would, in accepting the terms of the new legislation in India, be required to withdraw its international arbitration award claim, interest and costs and to end all legal enforcement actions in order to be eligible for the refund.
“The important thing for us is it returns the value that was taken from us. From our perspective it is the right thing to do, be pragmatic, put this behind us, move on,” he said.