Shares in Edinburgh oil firm surge on good news from India
CAIRN Energy saw its shares surge six per cent yesterday after the company appeared to move in line to receive a payout worth more than $1 billion from the Indian Government.
The Edinburgh-based oil and gas company has been embroiled in a long-running tax dispute with the Indian Government, which seized assets worth more than $1bn from the firm in 2014.
In December the company was awarded $1.2bn plus damages and costs after an international tribunal found in its favour in respect of the dispute. It has yet to receive any of the money concerned.
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However, the Indian Government has tabled legislation to scrap the retrospective tax provisions under which it seized assets from Cairn. These had been seen as a disincentive to overseas firms investing in the country.
The amendment concerned provides for the refund of amounts paid by firms affected while the law was in force, without interest.
The legislation was passed by the lower house of the Indian parliament yesterday. It will now be considered by the upper house.
Cairn Energy noted the amendment had been tabled, adding: “We are monitoring the situation and will provide a further update in due course.”
Shares in the firm closed up 9.7p at 168.2p yesterday.
They rose sharply on Thursday after the Government of India announced its move.
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Cairn Energy chief executive Simon Thomson has held out the prospect that the company could make big payouts to investors if it is paid the money it is seeking from the Indian Government.
The company made big finds in India under the leadership of its founder Sir Bill Gammell. It has shifted its focus to other areas.
The tax dispute concerns events leading up to the flotation of Cairn’s former subsidiary in India in 2007. Cairn has always insisted it has paid all taxes due in India.
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