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Govt to decide on Cairn deal by December

Petroleum Secretary S. Sundareshan put the ball in Cairn Energy CEO's Bill Gammel's court saying the UK-firm had sought the govt's nod for the $8.8-billion deal.

Mail Today Bureau | October 16, 2010 | Updated 10:25 IST

Petroleum Secretary S. Sundareshan on Thursday put the ball in Cairn Energy chief executive officer (CEO) Bill Gammel's court saying the UK-firm had sought the government's approval for the $8.8-billion deal for the sale of the Rajasthan and eastern offshore Ravva oilfields to Vedanta Resources only a few weeks ago.

"There is no delay on our part as they applied for government permission two months after having announced the deal with London-listed Vedanta Resources," he explained. Sundareshan said the government would take a decision in the matter, based purely on merit, by December- end.

"We are completely neutral to the Cairn-Vedanta deal. The government has no particular views on the merits of the deal," he said. The application is being examined by the petroleum ministry and the directorate general of hydrocarbons (DGH), he said. Companies investing in India had a right to exit and that right is well recognised, he added. Bill Gammel has been claiming that the government has delayed the deal and this will adversely impact India's image as an investment destination for foreign companies.

"These apprehensions are absolutely unfounded as the delay in seeking approval was on Cairn's part," he added. The deal that Gammel is trying to clinch with scrap dealer-turned billionaire Anil Aggarwal is contingent upon the Indian government's approval as it involves change of ownership of strategic national assets.

Sundareshan said the government will ascertain technical and financial capability of the new owner before giving a 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. It was petroleum ministry which informed Cairn Energy that they require permission of the government to undertake this deal, Sundareshan said. Cairn Energy holds 62.38 per cent stake in its Indian arm Cairn India.

The oil ministry maintains that under production sharing contracts (PSCs), any changes in ownership of the blocks require government consent.

Courtesy: Mail Today 

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