Public sector companies with telecom licence also asked to pay AGR dues

Even as the road for public sector companies that hold telecom licence primarily for their own network use is unclear, a letter by DOT, issued following Friday’s Supreme Court order, has been sent to them as well. Some companies like Oil India are expected to restart the legal process soon. 
 

And, any outgo from these companies could not only wipe out their surplus but create distress in other sectors also. The department of telecommunications (DoT) on Friday asked the telecom service providers and licensees to make immediate payment in accordance with the Supreme Court’s ruling. 

It had earlier slapped a demand notice on Oil India, seeking Rs 48,000 crore on account of adjusted gross revenue (AGR) dues. OIL’s notices are for 2007-08 to 2018-19 and the Rs 48,000 crore includes licence fee, penalties and interest.

OIL had taken up the matter with DoT and the ministry of petroleum and natural gas along with other affected central public sector enterprises (CPSEs) and added that the AGR does not apply to non-telecom companies. Oil India and other PSUs had filed clarificatory /modificatory petition before the Supreme Court. These companies own and operate telecom networks though they do not provide telecom services.

Oil India had obtained a National Long Distance Service (NLD) licence to establish the Supervisory Control and Data Acquisition System (SCADA System). It was for control, management and protection of OIL’s pipeline network used for transportation of crude oil, natural gas and petroleum products.
 

The NLD licence is predominantly used for the SCADA system and only the spare bandwidth capacity is leased out to other telecom operators, the company said. Licence fee is to be paid on gross total revenue from services provided under the NLD licence. 

Since the award of the NLD licence, the cumulative revenue of Rs 1.47 crore is earned by OIL from leasing spare bandwidth capacity. On this, all licence fees and other statutory dues have been paid by OIL regularly. However, based on the recent Supreme Court judgment on dispute raised by telecom service providers (TSPs), the apex court decided that the entire revenue of the licensee should be considered for determining AGR.

DoT has issued demand notices to these non-telecom service providers also seeking payment of licence fee on total reported revenue. 
 

GAIL has been asked to pay Rs 1.72 trillion, nearly four times its net worth of ~44,092 crore, and nearly three times its revenue. Power Grid has been asked to shell out nearly ~22,170 crore. This is almost equivalent to its revenue and over three times its net profit.