United Kingdom’s (UK) Cairn Energy Plc has offered to forego $500 million and invest that amount in any oil and gas or renewable energy project identified by the Indian government if it agrees to honour an international arbitration award and returns the value of loss it incurred because of being taxed retrospectively, sources 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 the BSE. Five years after that the Government passed a retroactive tax law and billed Cairn Rs 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 Rs 8,800 crore) plus costs and interest, which totals $1.725 million (Rs 12,600 crore) as of December 2020.