The Group of Ministers (GoM), headed by Finance Minister Pranab Mukherjee, is learnt to have favoured granting approval to the $9.6-billion Cairn-Vedanta deal and has referred back the issue for final nod to the Cabinet Committee on Economic Affairs (CCEA).
Emerging out of the 75-minute long GoM meeting, Petroleum and Natural Gas Minister S. Jaipal Reddy said the CCEA was expected to take a decision within two weeks. “A panel of ministers has looked at various aspects of the deal. It has taken a view on the matter and the same will be placed before the CCEA,'' he added while refusing to divulge the view taken by the GoM.
Mr. Reddy refused to say if the government approval to the Cairn Vedanta deal would be conditional or unconditional. “Traditionally it has been the procedure that proceedings of the GoM are not made public. The GoM has taken its own view. This view will be presented to the Union Cabinet. One thing is sure, the GoM is not going to meet again,'' he added.
It is learnt that the GoM has given a verdict in favour of the Cairn-Vedanta deal being given a go ahead and at the same time evolving a mechanism to address the concerns of Oil and Natural Gas Corporation (ONGC) on the royalty payment issue.
Indications are that the GoM may have chosen to ignore the tougher option of asking Cairn or its successor to consent to paying cess on the all important Rajasthan block as well as agreeing to cost-recovery of Rs.18,000 crore in royalty that ONGC pays in the fields, as a pre-condition for the nod.
Interestingly, Mr. Reddy said his Ministry's previous stand of supporting ONGC's demand for royalty being made cost recoverable from revenues of Rajasthan block might not be GoM's recommendation.
Cairn India has refused to accept the requirement of partner consent even though five oil blocks it won under the New Exploration Licensing Policy (NELP) explicitly provides for obtaining no objection from partners in case of change of ownership. It holds 70 per cent interest in the Rajasthan block but does not pay any royalty. It is opposed to cost recovery of the Rs. 18,000 crore royalty payments that ONGC has to make on its 30 per cent and Cairn's share of production
In a related development, Vedanta Resources said it had raised $1.65 billion (Rs.7,425 crore) through private placement of bonds to part-finance the deal. “This is a landmark transaction and represents largest non banking corporate bond issuances by an Indian group,'' the company said in a statement. The original deadline for closing the transaction was April 15 and later extended to May 20.
