According to the report, British oil giant Carin Energy’s $8.7 billion share put up for sale to mining major Vedanta Resources has received a green signal for security clearance by the Home Ministry. However, the deal emphasises on eight areas of concerns, which include 64 proceedings against Vedanta and its subsidiaries in several courts. Although the ministry pointed out that these concerns will not have direct linkage to the security no-objection certificate on the mining company.
It is a big deal for Cairn Energy, which has been waiting for such an auspicious time for more than a year, when Vedanta will get a positive sign to buy a bulk stake in Carin India. The security clearance was a huge hurdle that the government has put for Vedanta group, which is interested in buying 40% stake in Carin India from the UK-based Carin Energy Plc.
From 2003, when Vedanta group got listed on the London stock exchange until now, it has established a strong base in owning zinc, copper and iron ore assets. However, the deal adds a new page, where Vedanta will build up its position as a natural resource champion in India.
In June 2011, the Cabinet Committee on Economic Affairs has approved the proposal. However, the Petroleum Ministry is very much concerned for clearing the share transfer. The ministry has asked Carin India to first accept the terms of withdrawing the cess arbitration, and agree to incorporate royalty payment in the Rajasthan oilfields.
At present, ONGC holds 30% equity in the Rajasthan oilfields, and pays royalty on behalf of Carin India. In fact, this company doesn’t pay any royalty on 70% share in the Rajasthan oilfields. ONGC has assured to give NOC, if Carin India agrees to pay cess and make royalty cost recoverable.
Image Credit: AP / Biswaranjan Rout