New Delhi, Feb 6 (PTI) A crucial meeting to discussgovernment approval for Vedanta Resources'' USD 9.6 billionacquisition of Cairn India today remained inconclusive and OilSecretary S Sundareshan will meet the chief executives of thetwo firms again tomorrow to thrash out their differences.
While Oil Secretary S Sundareshan described the 90-minutedeliberation as "extremely constructive", Cairn Energy --which is selling most of its stake in its Indian unit toVedanta -- hoped to complete the transaction on schedule byApril 15.This was the first time the Oil Ministry met Edinburgh-based Cairn Energy Plc Chief Executive Bill Gammell, CairnIndia CEO Rahul Dhir and Vedanta representatives M S Mehta(Group CEO) and Tarun Jain (CFO) together.
Cairn India brought its most vocal independent director,Omkar Goswami, purportedly to put pressure on the Oil Ministryto give approval without insisting on three out of the 11preconditions it had set for according approval for the deal.
Sources said the two sides went over each of the 11conditions, with Cairn/Vedanta explaining their point of view.
The Oil Ministry, however, held its ground on the preconditionthat state-run Oil and Natural Gas Corp''s (ONGC) royaltyliability in Cairn India''s mainstay Rajasthan block will haveto be addressed before such approval.
The Rajasthan block, which gives Cairn India 90 per centof its valuation, is a losing proposition for ONGC, as it hasto pay 20 per cent royalty to the state government on theentire output from the field, even though its share ofproduction is only 30 per cent.
Cairn India does not pay royalty on the crude and haseven contested the payment of Rs 2,500 per tonne cess on its70 per cent share.
"We had extremely constructive dialogue... We hope tomove forward to a positive solution," Sundareshan toldreporters.
Refusing to dwell on the deliberations at the meeting,he said "various issues" concerning the deal were beingdiscussed.
Describing the deliberations as "constructive", CairnEnergy said, "Cairn and Vedanta continue to work with thegovernment of India to complete the proposed transactionbefore April 15, 2011."
Sources said the government is prepared to give approvalto the deal subject to Cairn/Vedanta meeting conditions likeagreeing to ONGC''s demand for recovering the Rs 14,000 croreroyalty the state firm will have to pay on behalf of CairnIndia from the sale of oil produced from Rajasthan fields.Acceptance of the demand would impact Cairn India''svaluation as its future profits will go down and the companysays its minority shareholder interest will be compromised.
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