New Delhi: The government will decide by December end on giving approval to Cairn Energy Plc’s proposal to sell a controlling stake in its Indian unit to London- listed Vedanta Resources, Oil Secretary S Sundareshan said on Friday.
“We are completely neutral to Cairn-Vedanta deal. The government has no particular views on merits of the deal,” he told reporters in New Delhi
The $9.6 billion deal is contingent upon government nod as the deal involves change of ownership of strategic assets like the giant Rajasthan oilfields.
“The petroleum minister Murli Deora has said this before and I will say it again that we will decide (on giving approval) by the year end,” Sundareshan said.
UK’s Cairn Energy on 16 August announced sale of up to 51 % stake in Cairn India to Vedanta Resources but made formal applications for government nod only about a month later. Cairn Energy holds 62.38 % stake in its Indian unit.
“There is no delay on our part. Cairn applied for government approval only a few weeks back. The application is being examined by petroleum ministry and (oil regulator) directorate general of hydrocarbons (DGH),” he said.
Companies investing in India had a right to exit and that “right is well recognised,” he said.
Sundareshan said the government will ascertain technical and financial capability of the new owner before giving nod.
Only companies technically capable of carrying out complex oil and gas exploration and production are awarded blocks and Cairn Energy too was judged on this parameter when in 2002 it bought out Royal Dutch Shell in the Rajasthan block, which is at the centre of its deal with Vedanta.
“We will examine (the Cairn application) absolutely on merit and come to a decision,” Sundareshan said.
He dismissed Cairn Energy chief executive Bill Gammell’s comments earlier this week that delays in government approval will hit India’s image as an investment destination, particularly when it’s launching the 9th round of bidding for exploration acreage under the new exploration licensing policy.
“These apprehensions are absolutely unfounded,” he said, adding that the delay in seeking approval was on Cairn’s part.
It was “petroleum ministry which informed Cairn Energy that they require permission of the government to undertake this deal,” he said. Cairn Energy took its time in making the application and things would have been different had it done so when Vedanta made applications to SEBI on 17 August for on open offer for additional 20 %.
Gammell had stated that it was important that the government’s approval doesn’t take too long as it may affect global investors, who are watching the deal’s progress. “Concerns about delays do not help the Indian case,” he had said.