Faced with prospect of its assets across the globe being seized just like Pakistan and Venezuela, the government decided to scrap retrospective taxation but the international embarrassment could have been avoided had 'attached' shares of Britain's Cairn Energy Plc not been sold, according to tax and legal experts. On Thursday, the government introduced a Bill in Parliament to scrap the tax rule that gave the tax department power to go 50 years back and slap capital gains levies wherever ownership had changed hands overseas but business assets were in India. The 2012 legislation was used to levy a cumulative of Rs 1.10 lakh crore of tax on 17 entities, including UK telecom giant Vodafone, but substantial punitive action was taken only in the case of Cairn.
Cairn Energy of UK on Monday said its oilfield in Rajasthan contains more than 2.5 billion barrels of oil reserves.
The Petroleum Ministry may have watered down its preconditions for approving mining group Vedanta Resources' acquisition of Cairn India, but the $9.6 billion deal will still hinges on no-objection from partner ONGC.
Cairn India, which is developing the oilfields in Rajasthan discovered by its parent Cairn Energy in 2004, has started preliminary work on the pipeline to bring the oil to market, its chief executive said on Monday.
ONGC, which partners Cairn India in its crown jewel oilfields in Rajasthan and seven other properties in India, has waived its preemption rights over the deal and given a no-objection certificate, sources privy to the development said.
Cairn Energy of the United Kingdom has again struck oil in Barmer basin of Rajasthan, Petroleum Minister Ram Naik said on Friday.
Firm to continue to press ahead with arbitration challenging new law on the tax, will seek $1 bn in damages
More than three weeks after it announced the sale of a majority stake in its Indian arm to Vedanta Resources, UK's Cairn Energy Plc has formally applied to the government for approvals, saying it will meet all contractual requirements needed to fructify the deal.
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Moving quickly towards ending a retrospective tax dispute with a firm that gave India its largest oilfield, the government has accepted Cairn Energy PLC's undertakings which would allow for the refund of taxes, sources said. Meeting the requirements of the new legislation that scraps levy of retrospective taxation, the company had earlier this month given required undertakings indemnifying the Indian government against future claims as well as agreeing to drop any legal proceedings anywhere in the world. The government has now accepted this and issued Cairn a so-called Form-II, committing to refund the tax collected to enforce the retrospective tax demand, two sources with direct knowledge of the development said.
London-listed mining group Vedanta Resources is running against time to close a USD 9.6 billion deal to acquire majority stake in Cairn India as government approval for the transaction is held up due to issues raised by state-owned ONGC.
Putting aside the plan for setting up a greenfield refinery in the state, Cairn Energy India, in a joint venture with ONGC, is planning to build a 500-km pipeline to evacuate crude oil from the Mangala, Bhagyam, and Aishwarya fields.
International investment in the domestic energy sector could get affected if the government unduly delays the deal between Cairn Energy and Vedanta Resources, says Bill Gammell, Cairn India Chairman and CEO of its British parent.
ONGC, which is 30 per cent partner in Cairn India- operated Rajasthan oilfields, is obliged to pay royalty on entire crude oil produce from the blocks, even though its share is just 30 per cent.
The board of Cairn India has on two occasions rejected oil ministry conditions that royalties paid by Oil and Natural Gas Corporation on its all important Rajasthan oilfields, be cost recoverable from oil sales saying this was against contractual provisions and not in the interest of the company and its shareholders.
Market regulator SEBI has not yet approved the open offer made by Vedanta Group to Cairn India shareholders, even as the target company formed a two-member panel to look into the offer made to minority shareholders.
Cairn Energy of UK has secured a $1 billion banking facility to fund its Rajasthan oil field development plan.
British firm Cairn Energy, which in 2004 discovered a huge oilfield in Rajasthan, will begin early oil production from the fields in a years' time from now.
Government has approved Cairn Energy's one-billion dollar development plans for four of the 18 oil discoveries made by the British firm in its Rajasthan block.
British oil firm Cairn Energy Plc on Tuesday announced a second significant oil discovery in its Rajasthan block, where it had in January found India's largest field in more than two decades.
ONGC, which is a 30 per cent partner with Cairn India in the giant Rajasthan oil field, had claimed that it had preemption or right of first refusal in Cairn India assets, like the Rajasthan block.
UK-based Cairn Energy PLC on Wednesday said it has agreed to drop litigations to seize Indian properties in countries ranging from France to the UK as it has accepted the Indian government's offer to settle tax dispute relating to the levy of taxes retrospectively. Meeting the requirements of new legislation that scraps levy of retrospective taxation, the company has given required undertakings indemnifying the Indian government against future claims as well as agreeing to drop any legal proceedings anywhere in the world. The government now has to accept this and issue Cairn a so-called Form-II, that will commit it to refund the tax collected to enforce the retrospective tax demand.
The $9.6-billion deal is contingent upon government nod as the deal involves change of ownership of strategic assets like the giant Rajasthan oilfields.
With Cairn Energy Plc voluntarily offering to meet government conditions, the Oil Ministry may find it difficult to nix its deal to sell majority stake in Cairn India to Vedanta Resources.
The government on Thursday brought a bill in the Lok Sabha to withdraw all back tax demands on companies such as Cairn Energy and Vodafone and said it will refund the money collected to enforce such levies.
Cairn India has drawn strength from its Scottish parent, but also built new systems and processes to support its role in the country's oil sector.
UK-based Cairn Energy will invest $1.33 billion in its Rajasthan oilfields to produce 1,25,000 barrels per day from mid-2007, an official said on Friday.
Cairn India, which found India's largest oil field in Rajasthan in over 30 years, has discovered a saline water reservoir near its oil field that will help pump crude oil to the ground level and enhance production.
The company plans to begin drilling in Bihar's Gangetic basin by next year. It has completed the seismic surveys and is currently studying the data collected to understand the geological structures below the surface.
State-run Oil and Natural Gas Corp (ONGC) may seek management control of the giant Rajasthan oilfields in lieu of allowing UK's Cairn Energy to sell majority stake in its Indian arm that now operates the field, to a non-oil firm, Vedanta Resources for $8.48 billion.
Scottish explorer Cairn Energy Plc rejected state-owned Oil and Natural Gas Corp's $200 million bid to acquire its oil and gas properties on east and west coasts of India.
British firm Cairn Energy has approached the Rajasthan government seeking permission for commercial production of up to six million tonnes of pit oil a year from its fields in Barmer district.
Cairn files notice against India in $1.6 billion tax dispute.
Petronas of Malaysia has picked up about 10 per cent stake in Cairn India Ltd, the subsidiary of Scottish oil firm Cairn Energy Plc, that is to be listed on Bombay Stock Exchange by the end of next month.
The government is likely to file an appeal against the Cairn arbitration award contesting its sovereign rights to tax, sources said.
Britain's Cairn Energy Plc has dropped lawsuits against the Indian government and its entities in the US and other places and is in the final stages of withdrawing cases in Paris and the Netherlands to get back about Rs 7,900 crore that were collected from it to enforce a retrospective tax demand. As part of the settlement reached with the government to the seven-year old dispute over levy of back taxes, the company - which is now known as Capricorn Energy PLC - has initiated proceedings to withdraw lawsuits it had filed in several jurisdictions to enforce an international arbitration award which had overturned levy of Rs 10,247 crore retrospective taxes and ordered India to refund the money already collected. Two sources with direct knowledge of the matter said Cairn on November 26 withdrew the lawsuit it had brought in Mauritius for recognition of the arbitration award and took similar measures in courts in Singapore, the UK and Canada.
Cairn has already taken steps to have the arbitration award recognised in nine major jurisdictions such as the US, UK, France, the Netherlands, Singapore and Canada's Quebec province, where Indian sovereign assets have been identified. It hasn't said what it might go after but assets could include Air India's planes, vessels belonging to the Shipping Corporation of India and property owned by state banks.
India is believed to have challenged in a court in The Hague an arbitration tribunal verdict that overturned its demand for Rs 10,247 crore in back taxes from Cairn Energy Plc -- the second time in three months that it has refused to accept an international award against retrospective tax.
There are no guesses on how many times the group of ministers will meet before any clarity emerges on the $9.6-billion deal.
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