After reluctantly agreeing to the requirement of the government nod to sell majority stake in its India unit to Vedanta Resources, Cairn Energy CEO Bill Gammell today called on Finance Minister Pranab Mukherjee and top government officials to seek support for the $9.6-billion deal.
Edinburgh-based Gammell, on his third trip to India ever since announcing a prospective deal to sell up to 51 per cent stake in Cairn India on August 16, also met T K A Nair, Principal Secretary to the Prime Minister and Oil Secretary S Sundareshan.
Gammell, who has been camping here since Tuesday, also met with oil minister Murli Deora and other top government officials during his three-day visit
“It was a courtesy call... I told him (Gammell) we will take a decision (on giving approval to the deal) on merit,” Sundareshan said after the 20-minute meeting.
“By February-end, we should be able to decide whether Cairn can sell its majority stake in the Indian unit to a firm with no experience in the oil sector,” he said, adding, “The oil ministry has not yet formed any opinion on the transaction”.
A Cairn spokesperson confirmed Gammell’s meeting but refused to elaborate on the discussions.
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Indian hydrocarbon law makes it mandatory for companies to have prior experience in order to secure a lease for exploration and production of oil and gas and the oil ministry will need to satisfy itself that Vedanta - a mining major with no oil sector experience - can satisfactorily operate Cairn’s oilfields.
The UK explorer initially denied there was any need for government approval on what it called a ‘corporate transaction’, involving the sale of shares and transfer of control of Cairn India to Anil Agarwal’s mining group.
In September, Cairn partially relented to the demand and applied for a formal nod to transfer control in seven non-producing exploration blocks, which Cairn India had won during the course of the New Exploration Licensing Policy (Nelp) rounds since 2000.
However, it left out its mainstay producing properties, like the landmark Barmer oilfields in Rajasthan, saying these were pre-Nelp blocks and did not have provisions requiring prior government consent.
Nevertheless, the oil ministry, backed by a legal opinion from the law ministry and the nation’s second highest law officer, the Solicitor General of India (SGI), insisted on Cairn applying for permission for each block separately.
Subsequently, on November 23, Cairn yielded ground and made what Sundareshan said was a ‘conditional’ application.
“They have applied with some conditions... We are accepting it and processing it,” he said.
Though the British firm has reluctantly acquiesced to the need for prior government consent, it still maintains that partner Oil and Natural Gas Corp’s (ONGC) nod is not required.
ONGC partners Cairn in all three of its producing properties in the country, besides five of the seven exploration blocks, by virtue of which it claims to have pre-emption rights over the Vedanta deal.