Centre backs ONGC on Cairn royalty issue

The petroleum ministry at Sunday's meeting with Cairn India supported the view held by Oil and Natural Gas Corp (ONGC) on the contentious royalty issue in the Rajasthan oilfield that has come in the way of Anil Aggarwal-run Vedanta Resources pushing through its $9.6 billion for acquiring the UK firm's Indian assets.

Petroleum Secretary S. Sundareshan will meet the chief executive of the two firms again on Monday to take the talks forward.

While Sundareshan described the 90-minute deliberation as extremely constructive, Cairn Energy said it hoped to complete the transaction on schedule by April 15. This was the first meeting held by the petroleum ministry in which both Cairn Energy Plc CEO Bill Gammell and Vedanta representatives, led by group CEO M.S. Mehta, were present.

The clauses governing the operation of the Rajasthan block, which gives Cairn India 90 per cent of its asset value, is considered 'unfair' as ONGC has to pay the entire 20 per cent royalty to the state government on the output of the field, even though it gets only a 30 per cent share.

Courtesy: Mail Today