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Cairn deal: govt for conditional nod

business Updated: Feb 17, 2011 00:53 IST
Anupama Airy
Anupama Airy
Hindustan Times
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The government is again discussing conditional approval for the $9.6-billion (Rs 43,500-crore) Cairn-Vedanta deal that is shortly heading to the Cabinet Committee on Economic Affairs (CCEA).

Amidst the February 20 deadline set by the management of Cairn Energy Plc for the government to convey approval for the deal, government sources said the constitution of a high-level inter-ministerial committee to decide on vexed issues related to payment of statutory levies on the oil produced from the Rajasthan fields is also being contemplated.

“The issue is no more restricted to just the petroleum ministry,” said a senior petroleum ministry official. “We are consulting the law ministry as also the Ministry of Corporate Affairs on this and the decision will not favour any one party and may be a compromise formula.”

All the three private parties including Cairn Plc, Cairn India and Vedanta Resources have turned down the pre-conditional approval being proposed by the petroleum ministry for clearing the transaction.

These conditions relate to ONGC’s claim to recover royalty payment costs from the Rajasthan oilfield and accepting the government’s position on the ongoing litigations over cess and related issues in other oil and gas fields of Cairn India.

Even as a compromise is being thrashed out, ONGC’s demand over royalty cannot be completely overlooked and both Cairn Plc and Vedanta will have to soften stands, government sources said