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PMO wants $9.6 bn Vedanta deal to be decided soon

The directive followed a one-on-one meeting between Vedanta Resources Chairman Anil Agarwal and Prime Minister Manmohan Singh last Wednesday.

twitter-logoPTI | January 10, 2011 | Updated 17:42 IST

The Prime Minister's Office (PMO) has asked oil ministry to decide on giving consent to Vedanta Resources' $9.6 billion acquisition of Cairn India by end January, at least a month earlier than the deadline Murli Deora's ministry had set for itself.

The directive followed a one-on-one meeting mining group Chairman Anil Agarwal had with the Prime Minister Manmohan Singh last Wednesday to press for an early decision, sources privy to the development said.

Vedanta is buying 40 to 51 per cent stake in Cairn India from Edinburgh-based Cairn Energy Plc.

Thereafter, London-listed firm's Indian unit Sesa Goa will make an open offer for an additional 20 pe cent stake to minority shareholders of Cairn India. Both these transactions are to close by April 15.

Sources said going by the February-end deadline set by Oil Secretary S Sundareshan, Vedanta could not have closed the deal by April 15.

This is because the open offer, which can be made only after government consent to the deal, will have to remain open for subscription for a total of 60 days.

If the government decision on the deal was to come by February end (and in March according to Oil Minister Murli Deora), the open offer could not have begun before first week of March and it would have closed in end-April or early May, missing the April 15 deadline, they said.

Agarwal pressed for an early decision with the Prime Minister, as oil ministry was adopting delaying tactics, the source added. The PMO promptly wrote to the oil ministry directing it to decide on the deal by month-end.

Sundareshan on Monday said the ministry will decide on giving approval to the deal by January-end or early February.

Cairn had made applications for transfer of control in all the 10 properties it has in India and completed other formalities on November 23.

Sundareshan had then stated his ministry "will need about two-and-half months to decide" on the application and set a February-end deadline.

Agarwal had also met Deora and Sundareshan after meeting the Prime Minister.

State-owned Oil and Natural Gas Corp (ONGC), which holds interest in all the three producing properties of Cairn and five out of its seven exploration acreage, has claimed pre-emption or right of first refusal by virtue of its stake.

Its claims have been backed by the Law Ministry and the Solicitor General of India in separate opinions on the deal, but Cairn has refused to acknowledge them.

Sources said it remains to be seen if the oil ministry will ignore law ministry and SGI opinion in deciding on the deal or ask Cairn to also seek ONGC's nod.

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