Cairn Energy Plc will need to take the consent of partner Oil and Natural Gas Corporation (ONGC) before selling majority stake in its Indian unit to Vedanta, petroleum secretary S Sundareshan said today.
The Cabinet Committee on Economic Affairs (CCEA) is likely to consider giving consent to Vedanta acquiring majority stake in Cairn India for $9.6 billion on Wednesday. “To my mind, they (Cairn) will require ONGC’s consent,” he told reporters on the sidelines of a Petronet LNG Ltd function.
He hoped the Cabinet would soon take a decision on giving approval to the transaction. “The Cairn-Vedanta deal has been placed before the highest levels of government. Hopefully, a decision will be taken very soon.”
Though Sundareshan did not say when the CCEA is likely to take up the issue, it is believed that it would be taken up on Wednesday.
The petroleum ministry has conditioned the approval to the $9.6-billion deal on Cairn getting a no-objection from ONGC, which holds stake in eight out of the 10 properties of Cairn India, including its three producing properties in Barmer, Cambay and Ravva.
The secretary said his ministry received Cairn’s applications for an approval only in November-end and the government did not delay in processing the application.
Cairn India had on November 23 made conditional application for the government nod.
The issue has been referred to the CCEA since there is a dispute regarding payment of royalty on the Barmer block. Though ONGC is a 30 per cent partner in the block, it pays the entire royalty on it being a government nominee. In its note to the CCEA, the ministry has proposed that either the consent be given with an approval for making royalty cost recoverable with other conditions or the government decides on the royalty and establishes its right on cess through the arbitration route.
