Pressure on Vedanta over Cairn deal easing

Doubts about the conclusion of the Vedanta-Cairn deal appeared to be easing, with a key union minister today saying the government had no issue with the acquisition if shareholders approved of it.

Separately, oil ministry sources said that state-run oil companies had no plans to launch a counter bid for Cairn India's Rajasthan oilfields as has been reported in the media.

"If shareholders approve, we have nothing to do...If shareholders have a problem, they can go to the High Court, CLB or us. We (MCA) should not be sitting here and prying on people," Corporate Affairs Minister Salman Khurshid told reporters when asked if the government has any issue with the $9.6 billion deal between the two.

London-listed mining group Vedanta Resources has entered into a deal to acquire 60 per cent stake in Cairn India, the owner of India's largest oilfield for $9.6 billion. It will mark the NRI billionaire Anil Aggarwal-owned Vedanta entering the oil business, but the deal is contingent on government approval.

"There is no counter bid," a top oil ministry official said. "The price at which Vedanta is acquiring Cairn India already is too high."

The ministry, which till early this week was nudging state-owned Oil and Natural Gas Corp (ONGC) to cobble up an alliance with Oil India and gas utility GAIL for a rival bid, says that it is only awaiting clarifications from UK's Cairn Energy Plc on it selling majority stake in Cairn India.

The change in stance possibly came about after Vedanta Resources Chairman Anil Agarwal spoke to Oil Minister Murli Deora at least on a couple of occasions this week.

There were also reports that Agarwal met Congress President Sonia Gandhi yesterday on issues relating to his India projects, but no confirmation could be obtained.

Also, the Prime Minister's Office is believed to have discussed the issue, sources said, adding that Cairn Energy is likely to respond to the ministry's queries by Friday.

The government approval is crucial, as Cairn's three producing oil and gas assets, including the Rajasthan fields and seven exploration blocks, either have explicit provisions for seeking prior approval before transfer of interest or gives pre-emption, or the right of first refusal (ROFR), to partners like public sector ONGC.

"We are awaiting response to certain clarifications sought from Cairn Energy and will decide (on giving approval to the deal) after that," the official said.

Meanwhile, the board of ONGC, which is a 30 per cent partner of Cairn India in the prolific Rajasthan oilfields, is likely to be briefed about the possible scenarios.

Cairn Energy Chief Executive Bill Gammell had yesterday stated that his firm would seek "government of India's endorsement and any necessary consent" for the Vedanta deal.