In a bid to end the impasse over Anil Agarwal-led Vedanta Resources’ $9.6-billion (R43,500 crore) deal to acquire a majority stake in Cairn India Ltd, the petroleum ministry has called a crucial meeting of all stakeholders on Sunday.
This is for the first time that the government will sit together with the senior management of UK-based parent Cairn Energy, Vedanta Resources, Cairn India and state-owned ONGC, to address two contentious issues concerning the sharing of royalty from Cairn’s Rajasthan oilfields.
From the government, while petroleum secretary S Sundareshan will chair the meeting, while petroleum minister Jaipal Reddy is expected to join in.
ONGC is a 30 % stakeholder in the Rajasthan oil block but pays royalty on the entire quantum of production as it is also the licencee of the block. Under the production sharing contract for the block, it is the licencee who must bear the royalty burden. But now, ONGC wants the royalty burden shared by all shareholders. There are also other conditions that have been raised by the ministry.
The meeting also assumes significance as despite the Prime Minister’s Office asking the petroleum ministry to decide on the deal within January, the ministry had not been able to move ahead after Vedanta refused to accept the conditions proposed by the ministry over sharing of royalty.
The deal also needs approvals from the Securities and Exchange Board of India (SEBI).
“The meeting is very crucial. If the petroleum ministry does not give its consent by mid-February, in all possibility the deal may fall through as the SEBI approvals for the deal and open offer by Vedanta’s firm Sesa Goa to acquire 20% shares of Cairn India gets delayed,” a source close to Vedanta told HT.
As per the sale and purchase agreement between Cairn Energy Plc and Vedanta, the deal has to close by April 15. The open offer process for minority shareholders would take around 60 days which means that SEBI’s permission to make the open offer has to come by mid-February.
Those who are likely to attend the meeting includes Bill Gammell, CEO, Cairn Energy Plc; M S Mehta, CEO, Vedanta Resources; Tarun Jain, CFO, Vedanta Resources; A K Hazarika, Chairman and Managing Director, ONGC; Rahul Dhir, CEO, Cairn India Ltd and the Director-General of Hydrocarbons, S K Srivastava.
The ministry has so far been batting for the ONGC.