There are two options listed in the Cabinet note. In the first, five pre-conditions are listed, instead of the 11 it had originally proposed to the Cairn-Vedanta deal in January. The five pre-conditions include royalty being made cost-recoverable, Cairn India withdrawing arbitration, disputing its liability to pay cess, Cairn India obtaining partner ONGC's no-objection and Vedanta providing performance and financial guarantees.!! As an alternative to the pre-condition of royalty and cess, the Ministry has suggested that the government will pursue all legal recourse for establishing its rights under the production sharing contract (PSC) in the case of cess.
On royalty, it will take appropriate decision to enforce the provisions of PSC to make royalty cost-recoverable.
The Cabinet is likely to approve the second option which is considered easier and least controversial. Sources in the Ministry said the Cabinet could also ask CIL to make an unconditional application seeking government consent for the transaction.!!
