Cairn-Vedanta deal: OilMin goes to Cabinet again

The $8.48-billion Cairn-Vedanta deal may have concluded and all government pre-conditions met, but the Oil Ministry has approached the Cabinet again for a fresh approval in view of the Home Ministry pointing to the alleged global and domestic "transgressions" by Vedanta group.

The Home Ministry, giving its security clearance for Vedanta buying majority stake in Cairn India, had on November 25 pointed to 8 instances of the mining group or its affiliates being involved in cases of default of payment, human rights violations or environmental damage.

Sources said the Oil Ministry approached the Cabinet Committee on Economic Affairs (CCEA) "to bring on record" the transgressions pointed by the Home Ministry.

"The material provided by the Ministry of Home Affairs has no bearing whatsoever on the security aspects," the note to the CCEA states.

Sources said the ministries of finance and law, in their comments on the note, have given a no-objection to the deal.

Comments of ministries of corporate affairs and environment as well as Planning Commission are still awaited, they said adding the issue may come up before the CCEA later this month.

The planned sale of 40% shares held by Cairn Energy Plc in Cairn India to Vedanta was first considered by the CCEA in April last year and approved in June, 2011 with certain conditions.

Cairn and Vedanta complied with all the preconditions and concluded the transaction last month.

The CCEA note points out that all approvals and pre-conditions for the share transfer had been achieved with the last one from state-owned Oil and Natural Gas Corporation (ONGC) on December 1.

ONGC, which holds stake in 8 out of the 10 properties of Cairn India, conveyed its "no-objection" to the deal after Cairn agreed to include royalty payment in Rajasthan oil block as "a cost recoverable item since commencement of production" and to pay the cess "in proportion to their respective participating holdings".

Cost recovery of royalty and cess payments were among the preconditions that the government had set for giving clearance to the transaction.