$9.6-bn Cairn-Vedanta deal under PMO lens again | business | Hindustan Times
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$9.6-bn Cairn-Vedanta deal under PMO lens again

business Updated: Feb 04, 2011 22:51 IST
Anupama Airy
Anupama Airy
Hindustan Times
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After the government’s conditional approval to Posco’s $12-billion (Rs 54,000-crore) plan to set up an integrated steel plant, all eyes are now on the $9.6-billion (Rs 43,500-crore) Cairn-Vedanta deal that is currently stuck over the issue of royalty payments on oil produced from Cairn India’s Rajasthan oil fields.

Government sources told HT that the Prime Minister’s Office (PMO) will yet again review the status of this mega billion dollar deal where Anil Agarwal-promoted Vedanta Resources is purchasing most of the 62.4% stake of UK-based Cairn Energy Plc in Cairn India Ltd for $9.6 billion.

Cairn India has 10 oil and gas properties including the Rajasthan field, which is capable of producing more oil than what India’s largest oil field at Mumbai High is currently producing.

At its last review, the PMO had asked the petroleum ministry to decide on the deal within January. However, the conditional approval proposed by the ministry was turned down by Cairn India’s new promoter Vedanta Resources.

The review by the PMO, government sources said, may follow the Sunday meeting called by the petroleum ministry to stitch the loose ends over the contentious issue of royalty.

While the Vedanta spokesperson refused comments, sources close to the group said Anil Agrawal and Cairn Energy chairman Bill Gammell have already arrived in India for discussions with the government. Cairn India CEO Rahul Dhir will also attend the Sunday meeting.

The ONGC board, which has a 30%stake in the Rajasthan oil field along with Cairn India, has already asked the petroleum ministry not to approve the sale unless its concerns over royalty payment are addressed.

ONGC has proposed recovering the R14,000 crore royalty that it will have to pay over and above its 30% share from the Rajasthan fields from the sale of oil.