The petroleum ministry will take a decision on clearing the $9.6-billion majority stake sale in Cairn India to Vedanta Resources in the next three to four days, ending months of uncertainty since the deal was announced last August.
Sources said a decision would be taken soon after the petroleum ministry gets the views of the department of legal affairs, which is expected any time. In the meanwhile, petroleum minister S Jaipal Reddy, who met Cairn Energy Plc chief executive Bill Gammell on Tuesday, said the ministry would clear the deal if the legitimate concerns of ONGC are addressed. Cairn said the meeting was constructive.
?We are determined that the concerns of ONGC are legitimately addressed,? Reddy said. ONGC, Cairn’s partner for the Rajasthan oilfields, now pays the entire 20% royalty on the crude produced from the state despite having only 30% stake in the project, because of a government decision in the 90s aimed at attracting foreign capital and technology. The state-owned company now wants the royalty burden to be shared proportionately as the Rajasthan project has become successful and needs more investments, which ONGC has to share. ONGC believes that its share of profits from the project does not justify the disproportionate royalty burden and the investment requirement. The government, which owns more than 70% in ONGC, wants to protect ONGC’s interest while clearing the deal. The minister said the talks would continue.
?The government cannot make even the slightest error in judgment considering the huge financial implications running into thousands of crores,? said a government official.