Cairn-Vedanta sale referred to CCEA for final decision: Reddy

May 27th, 2011 - 10:45 pm ICT by IANS  

New Delhi, May 27 (IANS) A ministerial panel has come to a unanimous decision which will be sent to the cabinet to take a final call on the proposal of Vedanta Resources to buy Cairn Energy’s India assets for $9.6 billion, Petroleum Minister Jaipal Reddy said here Friday.

After the meeting of the Group of ministers (GoM), Reddy told reporters that the panel had come to a unanimous decision, which will be sent to the Cabinet Committee for Economic Affairs (CCEA) for a final decision in two weeks.

“It has looked at various aspects of the deal. It has taken a view on the matter… it will be placed before the Cabinet Committee on Economic Affairs in two weeks time,” Reddy said.

He added that the decision of the high-level panel will not be made public. “The GoM will not meet on this issue again,” said Reddy.

In August 2010, Vedanta had proposed to acquire a majority stake in Cairn India for up to $9.6 billion but the deal has been held up due to protests from the state-owned ONGC, which has a 30 percent stake in Cairn India’s oilfields in Rajasthan — the biggest onshore finds in the country in two decades.

Although it owns less than a third of stake in the oilfields, ONGC has to pay royalty for the entire output of crude from the fields. The state-owned explorer has asked the government to correct this anomaly.

Both parties have been urging the government to take a call on the approval.

Vedanta, on the other hand, has already completed the mandatory 20 percent open offer for Cairn India, through its Indian subsidiary Sesa Goa. It managed to buy 8.1 percent of the shares through this offer.

It also bought a 10.4 percent stake from Malaysian energy major Petronas. With these two transactions, Vedanta now owns 18.5 percent stake in Cairn India.

On May 19, Cairn Energy said it had extended the closing date for the sale of 40 percent stake in its Indian subsidiary, though it had not given a new date to wrap up the deal.

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