The cabinet committee on economic affairs (CCEA), chaired by the Prime Minister Manmohan Singh, on Tuesday accorded a fresh approval to the Oil and Natural Gas Corporation (ONGC) for going ahead with the $2.6 billion acquisition of the UK listed firm?Imperial Energy Ltd.
ONGC is now in the process of making an open offer to the shareholders of Imperial Energy. The offer document has to be filed by ONGC with the concerned authorities in London by the midnight of Tuesday. The shareholders of Imperial will have 28 days time i.e upto January 6, 2009 to tender the shares. If acceptances are received in respect of 90% shares, OVL would be required to make payments to the shareholders, expected latest by mid January.
While petroleum minister Murli Deora refused to comment, sources said a fresh approval was required from the cabinet under the present circumstances as crude oil prices have fallen to $40 a barrel level as against over $100 a barrel, prevailing at the time of submitting of the bid by ONGC.
The fall in crude oil prices had led to the internal rate of return of over 10% anticipated by ONGC from this acquisition to less than 5% at the existing crude oil prices.
With parameters changing, a revised approval was sought from the CCEA at its regular meeting on December 4, but the matter did not come up for discussion because of the Mumbai terror attacks. Thereafter, OVL sought a small extension from UK Takeover Panel for the Cabinet to consider its application at its next meeting scheduled on December 11.
The CCEA specially met this morning after OVL, the overseas arm of state-run explorer, said that it may face court proceedings for breaching a ?binding? agreement if it were to default on a commitment to make a formal offer to Imperial shareholders by midnight tonight (London time).