 | « Back to article | Print this article |
The UK-based Cairn Energy on Tuesday said it will seek government's "endorsement" and necessary consent for selling its majority stake in Cairn India to London-listed Vedanta Resources for $8.48 billion.
"For the Vedanta transaction, we will seek the Government of India's endorsement and any necessary consent," Cairn Energy Chief Executive Bill Gammell said in a conference call with analysts.
Cairn Energy is selling up to 51 per cent out of its 62.37 per cent stake in Cairn India to Vedanta, the mining company controlled by NRI billionaire Anil Agarwal.
"We continue to work closely with the Indian government, with whom we have built an enduring partnership, throughout this process," Gammell, who had flown to Delhi to meet Oil Minister Murli Deora soon after announcing the Vedanta deal on August 16, said.
He, however, did not specify the approvals Cairn Energy would be seeking. The firm had last week written to the oil ministry detailing on the Vedanta deal.
The ministry was not satisfied with the details and wrote to Cairn Energy seeking explanation on provisions of the production sharing contract (PSC) in case of stake transfer.
Sources said Cairn Energy, which received the ministry letter late on Friday, is expected to give its reply any day. The letter states that certain PSC entered into by Cairn India for exploring for oil and gas, have parent company guarantees and some PSCs have explicit provision of prior government consent in case of change of ownership.
Sources said the ministry feels government approval is pre-requisite for conclusion of Cairn-Vedanta deal. On the other hand, Cairn Energy fells the Vedanta deal is a corporate transfer and not sale of stake in an oil field that would have triggered need for regulatory approvals.
Had Cairn Energy could have sold its shareholding in the stock market, government could not have done anything, they said adding Cairn India as a company continues to exist and only its shareholding is changing.
Cairn India holds 70 per cent operator interest in the 6.5 billion barrels Rajasthan block that is at the centre of its parent, Cairn Energy Plc's deal with Vedanta.
The PSC for the Rajasthan block provides for explicit government approval only in case of a party selling its interest in the block, but does not make the nod mandatory in case of change of ownership at corporate level like in the Cairn-Vedanta deal.
Similar is the case with its other producing properties - the Cambay basin block and eastern offshore Ravva oil and gas fields. But the seven exploration blocks it won in NELP rounds have provision for seeking prior government approval before ownership of a participating company is changed.