As regulatory hurdles loom, Cairn chief lands in Delhi
The $9.6 billion (R45,000 crore) Cairn Energy-Vedanta Resources deal may face regulatory and legal hurdles even as the authorities ruled out the possibility of the deal getting de-railed.business Updated: Aug 17, 2010 23:24 IST
The $9.6 billion (R45,000 crore) Cairn Energy-Vedanta Resources deal may face regulatory and legal hurdles even as the authorities ruled out the possibility of the deal getting de-railed.
"The deal is under the scrutiny of the petroleum ministry and a legal view may be taken from the law ministry," a senior petroleum ministry official told the Hindustan Times.
Alongside, the visiting chief executive of Edinburgh-based Cairn Energy Plc, Bill Gammell, is understood to have got a cold shoulder from both the government and ONGC. Bill was in the capital on Tuesday to explain the rationale behind the deal with Vedanta Resources.
Bill met Petroleum Minister Murli Deora and Petroleum Secretary S. Sundareshan in the afternoon as also ONGC Chairman and Managing Director R.S. Sharma on Tuesday evening.
While the exact details of Bill’s discussions with Deora and Sundareshan were not revealed, petroleum ministry sources said, "Under the production sharing contract (PSC) for the Rajasthan oil block, Cairn is required to inform the government and take regulatory approvals before going ahead."
"They (Cairn) have informed the government about this deal after it was publicly announced. We are studying all legal options on the modus operandi followed by Cairn Energy to sell a substantial stake in Cairn India."
Both Sundareshan and Deora later said that the "government was evaluating the deal to see that the interests of ONGC are not compromised in any way."
On his part, Vedanta Resources head Anil Agarwal, which is buying up to 60 per cent in Cairn India (40-51 per cent from Cairn Energy and rest through a public offer), told HT that he is neither changing the name nor the team that runs the company (Cairn India).
"There is nothing to worry. We don’t change the names of the companies we acquire. Whether it was Balco, Hindustan Zinc or Sesa Goa that we acquired, all have retained their names and so will Cairn India".
Bill, too, sources said, emphasised before Deora and ONGC that it is only the corporate structure of Cairn India that is undergoing a change. "There will be no change in the running of Cairn India," a source close to Bill Gammell said.
The source also said that Cairn Energy did not seek a buyer, but it was Agarwal who in early July called Gammell directly seeking a meeting.