Cairn GoM notified, to meet on Monday

Finance Minister Pranab Mukherjee-headed group of ministers on Cairn-Vedanta deal has been notified and is scheduled to have its first meeting on May 2.

This meeting will be followed by an EGoM meeting on food. The group will have Petroleum Minister S Jaipal Reddy, Law Minister Veerappa Moily, Telecom Minister Kapil Sibal and Planning Commission Deputy Chairman Montek Singh Ahluwalia as its members.

Former petroleum minister and now Corporate Affairs Minister Murli Deora did not find a place in the panel.

The $9.6 billion deal involving production of crude oil, government insists, require its approval as it involves scarce natural resources. The Union Cabinet that was supposed to take a decision on the deal chose to refer to a group of ministers earlier this month.

The petroleum ministry had circulated a cabinet note on the deal that presented two options — either conditional clearance or absolute clearance while leaving legal recourse open to both Cairn India and its partner ONGC. Sesa Goa, however, went ahead to launch the open offer to buy 20 per cent stake in Cairn India.

The company on Wednesday clarified to BSE that its open offer is ‘not subject to government consent’. The open offer ends on April 30.

Vedanta is to acquire a 40 per cent stake from Cairn Energy and make an open offer for an additional 20 per cent to minority shareholders of Cairn India. In case the open offer is not fully subscribed, Cairn Energy will sell the additional shares, but with a cap of 51 per cent, to make up for the shortfall.

ONGC insists 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. However, Cairn has consistently contradicted it.

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 firm has to pay not only its share of royalty but also the 70 per cent share of the operator.

Royalty of 20 per cent has to be paid to the Rajasthan government on the price crude may fetch.