Won't ask shareholders to extend deadline: Cairn

Cairn Energy, which proposes to sell 51 to 60 per cent stake in its Indian subsidiary, Cairn India, on Friday said it will not seek an extension from its shareholders for the April 15 deadline to conclude the multibillion dollar deal.

“I don’t intend to go back to shareholders to extend the deadline,” Cairn Energy Chief Executive Officer Bill Gammell told reporters after meeting oil minister S Jaipal Reddy here. “I’m confident that things will move further satisfactorily.”

A company spokesperson said, “Friday’s discussions were positive and constructive, and we continue to work with the government of India to secure the necessary consents and approvals in order to complete the transaction by April 15, 2011”.

Reddy said, “On Friday, the representatives of Cairn India and its British counterpart have met me and expressed concern about the uncertainty and delay in regard to the clearance of the Cairn-Vedanta deal. They were worried about their time frame. I told them I am naturally concerned about the time frame.”

He said the matter could have been dealt at his level, but he preferred to take it to the Cabinet Committee on Economic Affairs (CCEA) for approval. The petroleum ministry decided to place the deal before the CCEA after evaluating the application for nearly three months. It also imposed a set of preconditions on Cairn while insisting that the rights of ONGC will be safeguarded.

Recently, Cairn India said the government’s stance of making Cairn-Vedanta deal conditional to a series of requirements, including ONGC’s royalty issue, will negatively impact the valuation and was not acceptable.

ONGC insists that issues related to royalty and cess payment from Cairn’s Rajasthan block is ‘cost recoverable’ and must be sorted out before the deal is cleared.

Last month, ONGC had urged the ministry not to clear the deal till Cairn resolved the royalty issue. ONGC will end up paying Rs 14,000 crore as royalty for the life of Rajasthan block.

According to licence conditions for the Rajasthan block, ONGC has the right to take 30 per cent in any discovery free of cost, but the state-run company has to pay not only its share of royalty but also the 70 per cent share of the operator. A royalty of 20 per cent has to be paid to the Rajasthan government on the price crude may fetch.