Cairn-Vedanta deal to go to cabinet in 3 weeks
A row over a proposed oil assets deal between Cairn India and Vedanta Resources, valued up to $9.6 billion, could go to the cabinet for approval in 2-3 weeks, Oil Minister S Jaipal Reddy said today.business Updated: Feb 15, 2011 16:21 IST
A row over a proposed oil assets deal between Cairn India and Vedanta Resources, valued up to $9.6 billion, could go to the cabinet for approval in 2-3 weeks, Oil Minister S Jaipal Reddy said on Tuesday.
Cairn agreed in August to sell up to 51% in Cairn India to Vedanta, setting a target date of April 15 to seal the transaction, but the deal has been delayed as issues around royalty payments need to be resolved.
The deal is the biggest acquisition proposal in the Indian oil sector that could boost investor sentiment about the business climate in Asia's third biggest economy.
But Reddy's remarks signal that a decision on the deal could go beyond April 15 as the cabinet, now busy with the upcoming budget session of parliament and political firefighting, usually takes its time to decide on such matters.
"It is too big for one ministry to decide on it," Reddy told reporters.
"We are expediting the process. It may go to the cabinet in 2-3 weeks."
The views of finance, law and corporate affairs ministries would be sought before the deal goes to the cabinet, he said.
State-owned explorer Oil and Natural Gas Corp owns a 30% stake in some of the assets up for sale but pays 100% of the royalties. Reddy said the government would protect ONGC's interests.
"We cannot bail out buyers or sellers. We will not compromise on concerns of ONGC," he said.
On Jan. 30, ONGC's then chairman RS Sharma said his firm would end up paying a royalty of 140 billion rupees ($3.1 billion) on crude output from Rajasthan fields as per the production plan submitted by the private firm to the government.
On Tuesday, Vedanta shares in London traded down 1% at 23.89 pounds at 0929 GMT, while Cairn Energy was up 1.8% at 4.23 pounds.
Cairn India shares were down 0.8% at 323.80 rupees at 0929 GMT.