More than a month after a ministerial panel recommended conditional approval to the $9-billion Cairn-Vedanta deal, the Cabinet Committee on Economic Affairs (CCEA), which meets on Thursday, could take a call on the matter. The item is listed on the agenda of CCEA meet, said a government official.
A group of ministers headed by finance minister Pranab Mukherjee had on May 27 suggested a government nod only if Cairn or its successor agreed to bear a portion of the royalty payable on the Rajasthan oil fields and also accepted liability to pay cess on the oil produced.
It had recommended that royalty and cess should be cost recoverable.
Oil and Natural Gas Corporation (ONGC) have to pay 30 per cent royalty and cess with its 30 per cent participating interest. The rest will be borne by Vedanta and Cairn India.
Cairn Energy, which owns majority stake in Cairn India, yesterday decided to lower the price at which it would sell its 40 per cent stake to Vedanta by Rs 3,800 crore. The Scottish explorer yesterday announced it would sell the 40 per cent stake to Vedanta at Rs 355 per shares instead of the previously declared price of Rs 405.
While Vedanta offered Rs 355 to shareholders, who tendered shares in the open offer, it had also agreed to pay a non-compete fee of Rs 50 to Cairn Energy. With yesterday’s decision Cairn Energy will realise Rs 27,007 crore against the earlier amount of Rs 30,811 crore. Vedanta already has a 18.5 per cent stake in Cairn India and will acquire another 10 per cent directly from Cairn Energy by July 11. It, however, will need the government’s nod to acquire the remaining 30 per cent stake.
More than 11 months after Anil Agarwal-owned Vedanta Resources announced purchase of a majority stake in Cairn India from Cairn Energy last August, the two London Stock Exchange-listed companies announced amendment of the deal terms yesterday.
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Vedanta would no longer pay the controversial non-compete fee to Cairn Energy, thereby, providing a cushion to Vedanta for absorbing the hit on royalty payment that has now become certain.
Besides, the sale would be concluded in two tranches of 10 per cent and 30 per cent of which only the second tranche would be subject to government approval.