Oil India Moves SC On Its Order Over Paying AGR Dues

State-owned Oil India Ltd (OIL) has filed a clarificatory / modificatory petition in the Supreme Court about its earlier order which had expanded the definition of Adjusted Gross Revenue (AGR) for telecom companies to include non-core operations of any company having a telecom-related license.

Incidentally, OIL is the first public sector unit (PSU) to file a review petition against the AGR order.

It may be recalled that several other non-telecom players such as Gas Authority of India (GAIL), Power Grid Corporation, and RailTel have also been sent notices by the Department of Telecom (DoT) for recovery of dues calculated on the basis of their aggregate revenue.

Based on the SC order, the DoT had issued demand notices to OIL seeking payment of license fee on total reported revenue including revenue from sale of crude oil and natural gas which stands at Rs 48,500 crore.

Earlier, Oil India had stated, “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. OIL has taken up this matter with Department of Telecom & Ministry of Petroleum & Natural Gas along with other affected CPSEs and explained the non-applicability of interpretation of AGR to Non Telecom Companies”.

OIL had obtained a National Long Distance Service Licence (NLD License) 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 NLD license is predominantly used for SCADA system and only the spare bandwidth capacity is leased-out to other telecom operators, it said.

As per license terms, license fee is to be paid on Gross Total Revenue from services provided under the NLD license. Since the award of NLD license, the cumulative revenue of Rs 1.47 crore is earned by OIL from leasing of spare bandwidth capacity on which all applicable license fee and other statutory dues as per license terms has been paid by OIL regularly, the oil producer said.

“However, based on the recent Supreme Court judgment on dispute raised by Telecom Service Providers (TSPs), whereby it decided that the entire revenue of licensee should be considered for determining AGR, the DoT had issued demand notices to OIL also seeking payment of license fee on total reported revenue including revenue from sale of crude oil, natural gas, which neither relate to the NLD license nor can be treated as supplementary/value added services related to the NLD license,” OIL stated.