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| Can't decide on Cairn-Vedanta deal within deadline: Oil Min |
| Press Trust of India / New Delhi Feb 01, 2011, 20:52 IST |
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A day after the expiry of the deadline set by the Prime Minister's Office, the Oil Ministry today said it cannot decide on giving approval to Vedanta Resources' $9.6 billion acquisition of Cairn India within the fixed timeframe.
"We are also accountable to the system... We cant bind ourselves in deadlines," a top ministry official said.
PMO had early last month asked the ministry to decide on the Cairn-Vedanta deal on merit and "within January".
The ministry is ready to give "in-principal" nod to the deal provided Cairn/Vedanta complies with a set of 11 pre- conditions. The approval letter with the pre-conditions has been referred to the law ministry for comments.
The pre-conditions include Cairn/Vedanta agreeing to withdraw pending lawsuits and accepting ministry's diktat on future petroleum operations in Cairn's mainstay Rajasthan block.
"We are trying to expedite the process but that doesn't mean we will abandon our concerns," the official said.
Earlier in the day, Oil Minister S Jaipal Reddy said two issues - Rs 2,500 per tonne cess and 20 per cent royalty that state-owned Oil and Natural Gas Corporation (ONGC) has to bear in excess of its share in the Rajasthan block, have to be addressed.
"Once these issues are addressed in amicable way, there will be no problem at all," he said. "I think (Oil) Secretary (S Sundareshan) will discuss" the issues "with everybody related" to the transaction this week.
"You cannot operate with fixed deadlines," he told a private TV news channel.
The oil ministry official said the PMO's January-end deadline was primarily because Prime Minister Manmohan Singh wanted to give signal to the world that India has an investor-friendly policy environment where investors can exit whenever they want.
Sources said the pre-conditions, which have been referred to the Law Ministry to concurrence, states that Vedanta has to "give undertaking that the decision of the government would be final and binding" on all disputes on petroleum operations.
Further, it says the "government decisions/conditions (have to be) unconditionally accepted (by Vedanta) on the issues litigated by Cairn India and their associates".
The ministry also wants Vedanta to agree to consider the royalty paid on crude oil produced from the Rajasthan block in the project cost and its profits calculated thereafter.
As per PSC, a company is permitted to recover all project costs from the sale of oil or gas produced from a field before calculating profits for itself and the government.
ONGC holds a 30 per cent stake in Rajasthan block RJ-ON-90/1, but pays the royalty on the entire quantum of production, as it is the licencee of the block.
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