AGR Dues: PSU OIL moves to Supreme Court against Rs 48,000-crore demand

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Published: January 23, 2020 6:30:14 AM

State-owned firm said its cumulative revenue from NLD licence is only Rs 1.47 crore

AGR Dues, PSU OIL, Supreme Court, DoT, SCADA system, OIL pipeline network, Gail, PowerGrid“Till date, OIL has received demand notices for the period from FY 2007-08 to FY 2018-19 amounting to over Rs 48,000 crore including licence fee, penalties and interest,” the statement said.

State-owned Oil India Ltd (OIL) on Wednesday said it has filed a clarificatory/modificatory petition in the Supreme Court against a Rs 48,000 crore adjusted gross revenue (AGR) demand raised by the department of telecommunications (DoT) on cumulative revenue of Rs 1.47 crore it had earned on a national long distance telecom licence.

The demand raised by the DoT is a fallout of the October 24 order of the Supreme Court relating to the definition of AGR and what all goes into its computation. The order has hit hard the telecom operators with a total dues of Rs 1.47 lakh crore. Apart from the telecom operators, several non-telecom PSUs have also come under its net. Though these PSUs do not have telecom services as their core operations, they have a telecom licence of some nature or use spectrum for some part of their operations. Most of them had taken the concerned telecom licence in the name of the flagship firm instead of the subsidiary which runs telecom-related operations.

Since the SC order states that for calculating AGR entire revenues of the licensee firm need to be taken into account, these firms also have to pay their telecom licence fee on their entire revenues instead of only telecom-related revenues.

“OIL had obtained a national long distance service licence to establish supervisory control and data acquisition system (SCADA System) for control, management, and protection of OIL’s pipeline network used for transportation of crude oil, natural gas, and petroleum products,” the company said in a statement.

The NLD licence is predominantly used for the SCADA system and only the spare bandwidth capacity is leased out to other telecom operators.

“As per the licence terms, licence fee is to be paid on gross total revenue from services provided under the NLD licence. Since the award of NLD licence, the cumulative revenue of Rs 1.47 crore is earned by OIL from the leasing of spare bandwidth capacity on which all applicable licence fee and other statutory dues as per licence terms have been paid by OIL regularly,” it said.

Based on the recent Supreme Court judgment “the department of telecommunications issued demand notices to OIL also seeking payment of licence fee on total reported revenue including revenue from sale of crude oil, natural gas etc, which neither relate to the NLD licence nor can be treated as supplementary/value-added services related to the NLD licence”, the company said.

“Till date, OIL has received demand notices for the period from FY 2007-08 to FY 2018-19 amounting to over Rs 48,000 crore including licence fee, penalties and interest,” the statement said.

OIL said it has taken up the matter with the DoT and the ministry of petroleum and natural gas along with other affected Central public sector enterprises and “explained the non-applicability of interpretation of AGR to non-telecom companies”, it said.

“OIL has filed a clarificatory/modificatory petition before the Supreme Court against its order and the next course of action will be based on the outcome of the petition,” the statement said on Wednesday.

From gas utility Gail, the DoT has sought Rs 1,72,655 crore in dues on IP-1 and IP-2 licences as well as Internet Service Provider (ISP) licence. In response, Gail has told the DoT that it owes nothing more than what it has already paid to the government.

The firm told DoT that it had obtained ISP licence in 2002 for a period of 15 years, which expired in 2017. But Gail never did any business under the licence, and since no revenue was generated it cannot pay any amount.

On IP-1 and IP-2 licences, Gail has told the DoT that it generated Rs 35 crore of revenue since 2001-02 and not Rs 2,49,788 crore that has been considered for levying past dues, adding the revenue number the DoT is considering is after adding all the revenues that the company earned from gas trading and transportation business.

Sources said the dues being sought are more than three times the net worth of Gail and several times the actual revenue earned.

Besides Gail and OIL, the DoT is seeking Rs 40,000 crore from PowerGrid which had both a national long-distance as well as an internet licence.

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