Decision on Cairn deal won't be taken under deadline from Pvt cos

NEW DELHI: The government will expedite a decision on the controversial $9.6-billion Cairn-Vedanta deal but it will not accept any deadline from private companies, an oil ministry official said.

The deal, which has a shareholders' deadline of April 15, has had a roller-coaster ride for about six months since it was announced in August, largely because of a tussle between Cairn and ONGC, which has a 30% interest in the block, over royalty costs.

Oil ministry officials said Cairn had requested the government earlier this month that a decision should be taken by February 20 and some reports said the company had written to the government this week to reiterate its view. The company also needs time for the mandatory open offer before the transaction is completed.

This week, Oil Minister Jaipal Reddy told reporters at Panipat that his ministry would take the matter to the cabinet in two to three weeks after seeking opinions of the finance and law ministries as well as the corporate affairs ministry, which is currently headed by former oil minister Murli Deora. Reddy also endorsed ONGC's position that Cairn must also share a part of the royalty burden.

Reddy told ET that he would not comment on the matter and that he had nothing to add to what he had said at Panipat.

The oil ministry blames Cairn for delaying the decision and says the company had not applied for government approval for three months after the deal was announced in August. Cairn had initially maintained that the transaction involved change of shareholding pattern, which did not need the oil ministry's approval. "Today, they (Cairn Energy) want the government's approval before the budget session. But they are responsible for the delay as they lost more than three months in deciding whether they require the government's approval or not," an oil ministry official said requesting anonymity.

Cairn's spokesman reiterated the company's position on the deal: "We continue to work with the government of India in a constructive manner to secure the necessary consents and approvals in order to complete the transaction by April 15, 2011," he said.