Turning the heat on the Cairn-Vedanta deal, the Petroleum and Natural gas Ministry has written to the Securities Exchange Board of India (SEBI) asserting Cairn Energy plc's deal to sell majority stake to Vedanta Resources does not yet have its approval.
The approval of the Ministry is a condition contingent for the $8.48 billion deal to consummate.
At the same time, the Petroleum Ministry has written to Cairn Energy asking it to make formal applications for approval of transfer of ownership in each of the 10 properties where Cairn India holds an interest through a complex maze of 31 subsidiaries, none of whom are incorporated in India.
Official in the Petroleum Ministry said the Ministry wrote to SEBI soon after Cairn Energy letter on August 26 informing of its transaction to sell up to 51 per cent in Cairn India to Anil Aggarwal-owned Vedanta.
The letter to SEBI states the Government has the right to vet a change of ownership of a company operating fields like the giant Mangala oilfield in Rajasthan, which is at the centre of Cairn Energy's deal with Vedanta. Further, it says the deal will have to comply with regulations under production sharing contracts (PSCs) for the 10 properties which make government or partner state-owned ONGC approval pre-requisite for any stake sale. Interestingly, Cairn Energy is yet to apply for approval of the Government for its deal with Vedanta.
As per Vedanta's offer document, September 7 was the last date for any company to make a counter-offer to minority shareholders of Cairn India. The deal is yet to be approved by SEBI. Cairn has so far stated that its deal with Vedanta was a corporate transaction involving only share transfer and there would be no change in status of Cairn India which will continue to operate as an independent firm.
Cairn India has 30 subsidiaries, seven of which are incorporated in Australia, two in Mauritius, one each in Jersey, British Virgin Islands and Singapore and nine each in the U.K. and the Netherlands.
Cairn India holds 70 per cent in the Rajasthan block that holds 6.5 billion barrels of oil reserves besides two other producing properties — Ravva oil and gas field in the eastern offshore and CB-OS/2 block in western offshore Cambay basin, and seven exploration areas. For all of these, it has signed PSCs with the government.