Cairn Energy pins blame for $ 500 million loss on Indian government

Cairn Energy has reported a half a billion dollar loss as a direct result of action of the Indian Tax Department on the retrospective tax matter.

In the Half-Year Report Announcement, Cairn Energy said, "The sale of shares in the period results in a loss on derecognition of $ 230.8 million following seizure of the proceeds by the Indian Income Tax Department. Cairn held an approximately 3 per cent shareholding in Vedanta Limited, with a value of $ 522 million at June 30, 2018."

"Sales subsequent to the balancesheet date, as disclosed in the post balancesheet event note, reduce this holding to around 2 per cent. Dividends declared by Vedanta Limited and due to Cairn in the period of $ 64.5 million were also seized by the Income Tax Department are not recorded in the results for the period," the company reported.

Following these sales, Cairn Energy's retained holding in Vedanta Limited is now down to around 2 per cent, the statement added.

Cairn Energy said that it is seeking full restitution for losses totalling more than $ 1.4 billion resulting from India's expropriation of its investments in India in 2014. The Final hearing of Cairn's claim under the UK-India Bilateral Investment Treaty took place in August in The Hague. The Tribunal has stated that it will make appropriate arrangements to progress with the drafting of the award as expeditiously as possible.

"The reparation sought by Cairn in the arbitration is the monetary value required to restore Cairn Energy to the position it would have enjoyed in 2014 but for the Government of India’s actions in breach of the Treaty,” the company said.

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