The Cairn-Vedanta deal has taken a new turn, with the Union ministry of petroleum and natural gas referring the issue to the law ministry, which has sent it to the Solicitor General (SG).
The reference was made following government-owned Oil and Natural Gas Corporation (ONGC), Cairn India’s partner in three producing fields, seeking an opinion from the petroleum ministry.
“We have received a reference,” Gopal Subramanium, the SG, confirmed to this newspaper on the proposed deal, that will see the Anil Agarwal-promoted Vedanta group taking up to 51 per cent in Cairn India.
Cairn has written to the petroleum ministry twice on the deal, after its chairman, Bill Gammell, was asked to apply for approvals under the various production sharing contracts the company signed with the government.
Ever since the deal was announced on August 16, the petroleum ministry and ONGC had been asserting it could not go through without their approval. The Edinburgh-based Cairn Energy Plc decision to sell stake in Cairn India to the Vedanta group for $8.6 billion to $9.5 billion saw ONGC asserting its pre-emptive right on the blocks the two companies manage along with companies. “ONGC’s decision to assert its right and send a letter to the stock exchange is part of informal advice given to it by government lawyers,” said a senior official.
Though any chance of a counter-offer being made by ONGC has been ruled out, its chairman and managing director, R S Sharma, had yesterday told a news conference that the company would take any decision based on legal and commercial considerations.
In its letter to ONGC, Cairn had said the deal did not trigger any pre-emptive right or requirement for ONGC consent, as “the contract with Vedanta Resources Plc is at shareholder level of Cairn India, involving sale of shares – (and) there is no change to the Participating Interest in any of the PSCs to which the Cairn India Group is party”.
And, while the government asked Cairn to apply for permission under various PSCs, Cairn only “responded” for the Barmer, Ravva and Cambay blocks, the three assets producing 175,000 barrels of oil equivalent daily. It sought permission for only the remaining seven blocks, that are in still in exploration stage.
The next two weeks are crucial for the deal, with the mandatory open offer from Sesa Goa, a Vedanta group company, expected to start on October 11. Market regulator Sebi is yet to give its approval for the offer, which is proposed to be made at Rs 355 a share, not including a Rs 50 no-compete fee per share that Vedanta is paying to Cairn Plc.
