Britain’s Cairn Energy PLC is keen to reinvest in India if a retrospective tax issue it is facing is resolved, said its chief executive. The independent oil and gas exploration company gave the country its biggest onshore oil discovery and a gas find that opened the KG basin.
Cairn, which in early 1990s grew the Ravva oil and gas field in the Krishna Godavari basin, the Bay of Bengal and then went on to find the country’s biggest on land oil discovery in the Thar Desert, Rajasthan, was in 2014 slapped with a tax demand of Rs 10,247 crore over an internal business reorganisation it did of its India business years back.
The tax department confiscated its dividend income, stopped tax refund and sold its shares to recover the tax demand which was raised using the 2012 retrospective tax legislation.
“We are keen to reinvest in India provided this retrospective tax issue is resolved. India is one place where we would like to look at exploration licensing rounds,” its CEO Simon Thomson said.
Cairn Energy, which had in 2011 sold its India business to Vedanta Ltd, has challenged the retrospective tax demand before an international arbitration tribunal and expects India to honour the outcome, which is expected before the end of the year.
Over two decades, it had built a comprehensive knowledge of the Indian sedimentary basin and is best suited to explore, Thomson said, adding “We want to reinvest and the sooner we can stop talking about (retrospective tax) and move to talking about something positive, the better it will be for India and us.”
Since the retrospective tax demand was raised against Cairn Energy, India has conducted five auctions -- three for pure play exploration blocks and two for discovered oil and gas fields, but none of them attracted any significant new international name. The rounds have been dominated by oil PSUs such as ONGC and domestic private player Vedanta.
In 2014, Cairn Energy received notice from India’s IT department, requesting info relating to its reorganisation done in 2006.