AGR dues: GAIL, PowerGrid say they owe nothing

By: |
November 29, 2019 2:04 AM

If govt accepts their explanation, the same would apply to even telcos

GAIL, PowerGrid, ISP, GAIL AGR, DoT, telecom licence, PSU, ISP licence, telecom sectorIn a reply to an email query on the subject, GAIL said, “(India) Ltd obtained ISP (internet service provider) licence in 2002, for a period of 15 years, which expired in 2017.

Though the government has issued notices to several non-telecom PSUs having some form of telecom licence to pay up their adjusted gross revenue (AGR) dues totalling over Rs 2 lakh crore, firms like GAIL and PowerGrid have stated that they owe nothing and hence there was no question of paying anything.

In a reply to an email query on the subject, GAIL said, “(India) Ltd obtained ISP (internet service provider) licence in 2002, for a period of 15 years, which expired in 2017. But GAIL has never done any business under ISP licence. Since no business is done under ISP licence, there is no amount payable”.

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Interestingly, an internal note of department of telecommunications accessed by FE shows GAIL’s AGR from the ISP licence at Rs 35 crore since 2001-02. Based on the DoT’s definition of AGR, which was last month upheld by the Supreme Court, the department has calculated GAIL’s AGR at Rs 2.5 lakh crore and raised the due amount at Rs 1.72 lakh crore.

This is the amount which, according to DoT, the PSU has to pay by January 24, 2020, to the government.
Queried on the discrepancy between GAIL’s no dues and DoT’s number, GAIL officials said they are not aware how the DoT got the numbers as they are not in receipt of any such communication from it.

Similarly, another PSU, PowerGrid, which has both a national long distance as well as an ISP licence, said it has paid whatever is due as per its licence condition and owes nothing more to the government.

“When PowerGrid signed the licence agreement with DoT it was clear that only telecom revenue would be considered for the purpose of calculation of licence fees… telecom services contribute about 2% to the company’s revenue and the company made Rs 742 crore in 2018-19 from its telecom business which puts the licence fee at Rs 59 crore… PowerGrid would not make any further payment to the DoT and as it had already paid Rs 59 crore as licence fee, which is up to date,” sources said.

DoT, in its internal note, has put PowerGrid’s AGR at Rs 3,566 crore as claimed by the company. After factoring in its own definition of AGR, it has calculated the AGR at Rs 1.25 lakh crore and raised a due demand of Rs 22,168 crore. Such discrepancies are coming because the concerned PSUs have only taken their gross revenue from telecom licences to calculate their AGR and licence fee, while the DoT has used the entire revenue of the company to compute the amount. Upholding the DoT’s definition of AGR with regard to its dispute with telecom operators, the SC in its order of October 24 has said if a company held a telecom licence, its entire revenues, even those accruing outside the telecom licence, like forex gains or rental income, should be used for calculating AGR and paying licence fee.

While this surely hit hard the telecom operators with total dues in licence fee and spectrum usage charge touching Rs 1.47 lakh crore; even non-telecom PSUs got hit with dues totalling over Rs 2 lakh crore. This is because PSUs like GAIL or PowerGrid did not create a telecom subsidiary which acquired the telecom licence. Rather the parent firm acquired the telecom licence. Therefore going by the SC order their entire revenue needs to be taken into account rather than only telecom earnings.

If the government accepts the explanation of GAIL or PowerGrid and waives off their dues, it would have to do the same for the telcos because in that case even they owe nothing.

While the telcos have filed a review petition in the SC seeking waiver of interest, penalty, and interest on penalty on the dues, which constitute 75% of the total dues, none of the PSU has done anything similar with regard to their dues. Till date the government has also not shown any alacrity in recovering the dues from the PSUs or come out with a statement as to what are they going to do in their case

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