Companies

Cairn seeks approval for its deal with Vedanta by Feb 20

PTI New Delhi | Updated on March 12, 2018 Published on February 17, 2011

Mr.Bill Gammell, Chief Executive Officer, Cairn Energy and Mr.Anil Agarwal,Chairman, Vedanta. File Picture by SHASHI ASHIWAL   -  Businessline

In a move seen as pressure tactics, UK’s Cairn Energy Plc has asked the oil ministry to decide by this weekend on giving a nod to sale of its majority stake in Cairn India to the mining group Vedanta Resources.

Cairn Energy wrote to the ministry within days of it emerging that Petroleum Minister Mr S Jaipal Reddy was referring the $9.6 billion deal to the Cabinet for approval.

“They are accusing us of sitting on the approval for six months. But the fact is that Cairn applied for government approval only on November 23, 2010, more than three months after the deal was announced,” a top oil ministry source said.

“Do you think, the government should have acted on the basis of a press statement they issued and given them the approval?” he asked.

Cairn had at the first instance rejected the need for government’s nod. It eventually came around but made a conditional application on November 23 last year.

“We asked them to make an unconditional application for approval but they have rejected our pleas,” he said.

Also, it rejected the pre-emption or right of first refusal of partner Oil and Natural Gas Corp (ONGC), which holds stakes in 8 out of the 10 properties held by Cairn India in the country.

While on February 11, Mr Reddy had decided to refer the issue to the Cabinet, Cairn Energy earlier this week wrote to the ministry saying “a decision on the Government of India’s approval is critical by February 20 in order for us to be able to complete the transaction by April 15, as approved by Vedanta and Cairn shareholders.”

“I cannot comment on the corporate deadlines. The ministry had the competence to decide on the issue but since the issue at hand involved complex dimensions, we decided to seek nod of Cabinet,” the source said.

The ministry wants the excess royalty and cess payments made by ONGC in Cairn India’s mainstay Rajasthan oilfields be “legitimately addressed” before approving the deal.

ONGC pays royalty at the rate of 20 per cent of oil price realised on not just its 30 per cent share, but also on Cairn India’s 70 per cent interest.

“They (Cairn) say ONGC is playing spoilsport but the fact is that ONGC had sought equitable sharing of royalty on July 14, more than a month before the Cairn-Vedanta deal was announced,” the source said.

Vedanta is to make an open offer for acquiring 20 per cent stake from minority shareholders of Cairn India after the government approval and complete the process by April 15.

Cairn Energy Plc CEO Mr Bill Gammell met Oil Secretary Mr S Sundareshan yesterday and today he was to meet Law Minister Mr Veerappa Moily, whose ministry is to give inputs on the note oil ministry is moving for Cabinet.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on February 17, 2011
null
This article is closed for comments.
Please Email the Editor