Cairn Energy ready to reinvest in India if retro tax issue is resolved, says CEO
Britain’s Cairn Energy PLC, which gave India its biggest onshore oil discovery and gas find that opened the KG basin, is keen to reinvest in the country if the retrospective tax issue it is facing is resolved, its chief executive said.
Cairn, which in the early 1990s grew the Ravva oil and gas field in the Krishna Godavari basin in the Bay of Bengal and then went on to find the country’s biggest inland oil discovery in the Thar Desert of Rajasthan, was in 2014 slapped with a tax demand of ₹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 told PTI.
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.
The company has over two decades built a comprehensive knowledge of the Indian sedimentary basin and is best suited to explore, he said.
“We want to reinvest and the sooner we can stop talking about (retrospective tax) and move to talk about something positive, the better it will be for India and all of us,” he said.
“Companies always look at areas where they have expertise. 20 years of working in Indian sedimentary basins has given us enough knowledge and understanding,” he said. “Ask ONGC or other partners, we are a good operator. So actually we are pretty well placed.”
“Such is our reputation abroad that we can bring new international partners (into India). We can act as a catalyst. There is a lot to do as India has huge unexplored and under-explored areas,” he added.
While the Ravva field that Cairn opened is still producing, the Rajasthan block contributes to 30 per cent of domestic production.