Even as Anil Aggarwal-owned Vedanta Resources plc continued to run against time to get approval for its $9.6 billion deal to acquire stake in Cain India Limited (CIL), the talks between Petroleum Ministry and top executives of CIL and Vedanta remained ‘deadlocked' with no result in sight.
The first round of talks held on Sunday did not produce any result with both sides sticking to their respective stands.
Another round of talks was scheduled for Monday but despite a day long wait, officials of the two companies had to return without any dialogue taking place.
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It is learnt that Petroleum and Natural Gas Minister Jaipal Reddy was formally briefed on Monday about the talks held on Sunday and the possibilities involved.
Petroleum Secretary S. Sundareshan, who chaired the Management Committee meeting, said the talks on Sunday were extremely constructive and expressed hope of finding a positive solution to issues blocking Vedanta's bid to acquire control of Cairn Energy's Indian arm. Vedanta hopes to complete the transaction before the April 15 deadline.
State-run Oil and Natural Gas Corporation, which is a 30 per cent stake holder in the Barmer oil fields, was kept out of the talks. ONGC has asked the government not to approve the sale unless its concerns are addressed. Bill Gammell, chief executive of Cairn Energy, Rahul Dhir, Cairn India Chief Executive Officer, M. S. Mehta, Vedanta Resources plc Chief Executive, and Tarun Jain, Chief Financial Officer, took part in the meeting on Sunday.
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Both sides on Sunday went through each of the 11 pre-conditions set by the Petroleum Ministry. The Ministry held its ground on the pre-condition that ONGC's royalty liability in Cairn India's mainstay Rajasthan block would have to be addressed before such approval.
The Rajasthan block, which gives Cairn India 90 per cent of its valuation, is a losing proposition for ONGC, as it has to pay 20 per cent royalty to the state government on the entire output from the field, even though its share of production is only 30 per cent.
Cairn India does not pay royalty on the crude and has even contested the payment of Rs. 2,500 a tonne cess on its 70 per cent share.
Both Cairn India and Vedanta want Petroleum Ministry to give approval without insisting on three out of the 11 pre-conditions, including ONGC's demand for recovering the Rs.14,000 crore as royalty the state firm will have to pay on behalf of Cairn India from the sale of oil produced from Rajasthan fields. It is also opposed to royalty being made cost-recoverable and Cairn India giving up its rights in present and future disputes.