Cabinet nod to OVL's US firm buy

The government on Thursday permitted ONGC Videsh Ltd, the overseas arm of the state-run ONGC, to acquire US oil firm Ominex De Columbia jointly with Chinese company China National Petroleum Corp (CNPC).

"The Cabinet Committee of Economic Affairs has permitted OVL to go ahead with the acquisition," Finance Minister P Chidambaram said after a CCEA meeting.

He said OVL would fund the acquisition either from its own resources or with that of its parent company. He did not give further details, citing commercial reasons, and added that only the petroleum ministry could disclose further information.

However, official sources said OVL had submitted a joint winning bid with CNPC for Omimex de Columbia, which had onshore producing, as well as exploration blocks in Columbia, with net proven reserves of around 157 million barrels.

Meanwhile, the CCEA also approved investment by Cayman Islands-based Software Development Systems or its wholly-owned subsidiary SDC Mauritius to acquire 100 per cent stake in Kappa Investments Limited, an Indian company which is in the process of incorporation.

According to the finance minister, the total inflow of foreign investment as a result of the above transaction will be about $515 million or Rs 2,317 crore.

The share capital will be used to acquire and hold investments in Flextronics Software Systems Limited, which is engaged in the information technology business, with the ultimate objective of consolidating the activities of Kappa Investments Limited and engaging in the IT business.

The CCEA also gave its approval for the restructuring of Central Electronics Limited. According to Chidambaram, the company had been restructured once earlier but was "still not out of the woods".

The package includes a moratorium on the principle amount of Rs 12.32 crore for 10 years and waiving of interest and penal interest of 4.25 crore till March 31, 2006.

The CCEA also gave its approval for a transmission-system associated with the Gandhar-II gas-based power project (1300 Mw) of PowerGrid Corporation India Limited at an estimated

The committee has fixed the statutory minimum price of sugarcane for the 2006-07 sugar season at Rs 80.25 per quintal for a basic recovery rate of nine 9 per cent.

However, there would be a premium of Rs 0.90 for every 0.1 percentage point increase in the basic recovery rate. It was Rs 79.50 per quintal last year.