Panipat, Feb 15 (PTI) Strongly backing state-owned ONGC''sstand, Oil Minister S Jaipal Reddy today said his ministry isreferring mining group Vedanta Resources'' buyout of CairnIndia to the Cabinet.
The USD 9.6 billion deal is going to the CabinetCommittee on Economic Affairs (CCEA) because of a standoffover the excess royalty Oil and Natural Gas Corp (ONGC) payson Cairn India''s oilfields in Rajasthan.
"... as it is a huge issue, we are trying to go to CCEA,"Reddy told reporters here.The note for the CCEA is being prepared and views of allconcerned ministeries, including finance, law and corporateaffairs, will be taken before it being put to the Cabinet, hesaid.
"We cannot bailout any seller or buyer. We will notcompromise on concerns of ONGC," Reddy said. "The claim ofONGC that royalty should be a cost recoverable item, is beingsupported by us."
ONGC not just pays royalty on its 30 per cent share ofoil from the Rajasthan block but also on partner Cairn India''s70 per cent share, making the nation''s largest onland fields alosing proposition for it.
Cairn says ONGC is also contractually bound to pay Rs2,500 per ton cess on all of the 12 million tons of projectedcrude oil output from the fields in the 3,111 sq km block.
The oil ministry wants the twin liability of Rs 21,800crore on ONGC to be addressed before giving nod to Vedantabuying most of 62.4 per cent stake held by UK''s Cairn EnergyPlc in Cairn India.
However, Cairn and Vedanta opposed tooth-and-nail itsproposal to make partners share the levies equitably.
"We are trying to expedite the process (of getting CCEAapproval). I think it may go to Cabinet in 2-3 weeks," Reddysaid.
A CCEA approval by month end may just give enough time toVedanta group to make and complete an open offer for buyingadditional 20 per cent from Cairn India''s minorityshareholders, by April 15. But any delay beyond that wouldleave very little time for Cairn and Vedanta to conclude thetransaction within that timeline.
Reddy said CCEA was being approached as "it (transaction)is too big for one ministry to handle".
Sources said that at a meeting called by Oil Secretary SSundareshan last Sunday, Cairn Energy Chief Executive BillGammell had even given a veiled threat of calling of the dealif the ministry made this a precondition for approval.While Gammell is believed to followed up with February 6deliberations with a meeting with top officials in the PrimeMinister''s Office, Cairn India board on Thursday also opposedany move that will impact its valuation. .