Oil India Limited (OIL), India’s second largest National Exploration & Production Company had obtained a National Long Distance Service Licence (NLD 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 NLD license is predominantly used for SCADA system and only the spare bandwidth capacity is leased-out to other telecom operators.
As per the license terms, license fee is to be paid on Gross Total Revenue from services provided under the NLD license. Since the award of NLD licence, the cumulative revenue of Rs.1.47 crore is earned by OIL from leasing of spare bandwidth capacity on which all applicable licence fee and other statutory dues as per license terms has been paid by OIL regularly.
However, based on the recent Supreme Court judgement on dispute raised by Telecom Service Providers (TSPs), whereby, Hon’ble Supreme Court decided that entire revenue of Licensee should be considered for determining AGR, Department of Telecommunications has 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. 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 Telecommunications & Ministry of Petroleum & Natural Gas along with other affected CPSEs and explained the non-applicability of interpretation of AGR to Non Telecom Companies.
On 22nd January 2020, OIL has filed a clarificatory/modificatory petition before the Hon’ble Supreme Court against its order and next course of action will be based on the outcome of the petition
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