Imposing conditions could kill Cairn-Vedanta deal warns Cairn Energy: Report

Posted By: Religare
Subscribe to GoodReturns

Imposing conditions could kill Cairn-Vedanta deal
A meeting is planned early next week of an Indian ministerial panel, headed by Finance Minister Pranab Mukherjee to advise the cabinet on whether to approve the Cairn-Vedanta deal, which has been pending since last year. Vedanta offered to buy up to a 60 per cent stake in Cairn India in for a sum of $9.6 billion in August 2010.

But due to differences between Cairn and Oil Natural Gas Corp (ONGC) over the payment of royalties the deal has been pending. ONGC gets just 30 per cent of the output from Cairn's oilfields, but it pays royalties on 100 per cent of the production under a "royalty holiday" scheme dating from the 1990s aimed at promoting private oil exploration in energy-hungry India.

ONGC has been pushing for an equal share of the royalties before the government approves the sale and Vedanta has mentioned its unwillingness to proceed with the deal if it is asked to share the royalty burden. The cabinet is split over whether the royalty row should be settled before or after the sale goes through.

Cairn Energy has warned India that imposing conditions on the deal might kill the deal and has also said to the Indian government that the deadline for sealing the transaction will not be stretched beyond the current extended deadline of May 20, according to the Indian Express newspaper.

Read more about: cairn india, ongc, oil and gas
Story first published: Monday, May 2, 2011, 9:30 [IST]
Please Wait while comments are loading...
Company Search
Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'