Waking up to the challenge from abroad, state-owned Oil and Natural Gas Corporation (ONGC), Oil India Limited (OIL) and GAIL (India) are learnt to be in talks to make a joint bid to counter Vedanta Resources' $8.48 billion offer for a majority stake in Cairn India.

Sources in the Petroleum and Natural Gas Ministry said the three PSU companies have already got commitments for $10 billion in loan from international banks if they attempt such a move. The development comes close on the heels of Petroleum and Natural Gas Minister Murli Deora holding talks with officials in the Ministry and the Petroleum Secretary, S. Sundareshan, shooting off a letter to Cairn Energy Plc seeking details of the deal with Vedanta Resources.

Officials also indicated the possibility of some private sector players also joining hands in the consortium to make the counter bid. The Ministry is not comfortable with Anil Agarwal-owned Vedanta Group buying 51-60 per cent of Cairn India for $8.48 to $9.6 billion and is learnt to have asked the PSUs to work out a joint bid. Vedanta Resources is already facing trouble in Orissa for its bauxite mining project which faces tough environmental issues.

The Government, as already indicated, was also looking at various legal options to take on Vedanta Resources and deny it the approval necessary for conclusion of its deal with the U.K.'s Cairn Energy, which holds 62.37 per cent stake in Cairn India.

Officials said that ONGC had got informal commitments for funding up to $10 billion for the takeover bid. The ONGC-OIL-GAIL consortium may make a bid at more than the Rs. 405 a share offered by Vedanta. “If the Government makes up its mind, then nothing can prevent it from achieving what it wants. Time is not a factor at all and quick decisions, if required, would be taken to protect the national assets,” a senior official said.

The Petroleum Ministry was also against Vedanta acquiring Cairn's stake because it was a non-oil company. The Ministry feels it holds the trump card on Vedanta-Cairn deal because as it feels that government approval is a must.

However, Cairn Energy is of the view that the Vedanta deal is a corporate transfer and not sale of stake in an oil field that would have triggered need for regulatory approvals.

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 $8.48 billion deal to sell its majority stake in the company to Vedanta Resources.

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