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Edinburgh-based Cairn Energy Plc may have to once again extend the deadline for concluding sale of 40 per cent stake in its Indian unit to Vedanta Resources as a ministerial panel vetting the deal is unlikely to meet before next week.
A desperate Cairn Energy Plc Chief Executive Mr Bill Gammell on Wednesday met Oil Minister Mr S Jaipal Reddy to press for a decision before the May 20 deadline his firm and Vedanta have set for concluding the $9.6 billion deal.
Mr Gammell, who could not get an audience with Mr Reddy yesterday, “expressed deep concern” on missing the deadline, a source privy to the deliberations at the meeting said.
Mr Reddy on his part expressed helplessness as Finance Minister Mr Pranab Mukherjee is the one who has to convene the meeting of the Group of Ministers (GoM). Moreover, the deadline was internal to Cairn and Vedanta and had got nothing to do with government. Cairn Energy spokesperson Mr David Nisbet could not be reached for comments immediately.
“There is no indication of the GoM meeting being held this week. Finance Minister’s office has inquired of availability between May 17 and 19 and it is very unlikely that the meeting can take place before that,” the source said.
It is not clear if the GoM would take more than one meeting to vet the proposal, after which it has to go back to the Cabinet Committee on Economic Affairs (CCEA) - the final approval authority in this case.
Cairn, which had previously set April 15 as the deadline for concluding the sale, had made much hue and cry saying the timelines were sacrosanct and could not be extended.
But a day after CCEA on April 6 referred the deal for vetting to the GoM, the deadline got prolonged to May 20.
The source said Mr Gammell, who also had a brief meeting with the Law Minister Mr M Veerpa Moily, again harped that the May 20 deadline cannot be extended.
The GoM, which besides Mr Mukherjee, Mr Reddy and Mr Moily comprises of Planning Commission Deputy Chairman Dr Montek Singh Ahluwalia and Telecom Minister Mr Kapil Sibal, is split right in the middle on the issue of giving approval to the deal.
Law Ministry and Planning Commission have backed Mr Reddy’s first option of giving clearance to Vedanta only if it agrees to ONGC being allowed to recover the Rs 18,000 crore the state-owned firm is liable to pay in royalty on behalf of Cairn India in the all important Rajasthan oilfields.
Finance Ministry is in favour of Mr Reddy’s second option of government giving consent without any pre-condition and taking appropriate decisions to protect ONGC’s interests.
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