Business

Edinburgh oil firm halts actions against Government of India

THE oil and gas firm founded as Cairn Energy has reiterated that it expects to pay out special dividends totalling $500 million (£370m) in coming weeks, as it nears the anticipated conclusion to a long-running tax dispute in India.

The Edinburgh-based company, which changed its name to Capricorn Energy last month, said it has ended the enforcement proceedings which it launched around the world against the Indian government.

The proceedings included moves to seize assets owned by the government around the world, such as residential properties in Paris and its stake in the Air India business.

The company launched the actions in an attempt to get the government to pay $1.7bn it expected to receive after an international tribunal found in its favour.

In September the company announced that it had agreed a compromise with the government under which it would get a refund of INR 79bn (around US$1.06bn).

It said then that payment of the tax refund would enable a proposed return to shareholders of up to $700m, via a special dividend of $500m and a share buyback programme of up to $200m.

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Capricorn said yesterday that it has entered into the final stage in its undertakings with the Government of India by withdrawing all global enforcement proceedings.

It added: “Capricorn is working collaboratively with the Government of India towards expediting the refund … the previously announced special dividend is expected to be paid in early 2022.”

The company made big finds in India under the leadership of its founder, former rugby internationalist Sir Bill Gammell. It has shifted its focus to other countries, including the UK, Mexico and Israel.

The dispute with the Indian Government started in 2014, when the administration tried to impose a $3.2bn tax bill on the firm. It concerned events leading up to the flotation of the company’s former subsidiary in India in 2007.

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The company insists it has paid all taxes due in India. It sold a controlling stake in Cairn India to Vedanta Resources for $5.5bn in 2010. Simon Thomson succeeded Sir Bill as chief executive in 2011.

In November the company said it would change its name to Capricorn from December 13. It said the move followed an agreement made at the time of the Cairn India flotation.

Capricorn Energy shares closed up 3.4p at 196.8p.

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