FE | Yahoo News | August 28, 04:35 AM
The government on Friday said it has received a response to its queries from UK’s Cairn Energy about the proposed majority stake sale in the company’s Indian arm to Vedanta Resources, but did not commit that the deal shall be approved. "We have received a response from Cairn. It shall be examined," an official in the government told FE. When asked if the government would clear the deal, the official said, "It is too early to say." Cairn Energy is believed to have told the government that it will comply with all contractual obligations in the proposed majority stake sale in Cairn India to the world’s fifth largest miner. Vedanta is buying 40-51% in Cairn India from Cairn Energy and up to 20% from open market, in a deal worth $9.6 billion.
Petroleum secretary S Sundareshan on Friday discussed the details of the proposed deal with officials in the ministry of law and justice. "I have nothing to say on this at this juncture," Sundareshan told FE when asked about the government’s conclusion on the deal. Secretary, department of legal affairs, D R Meena declined to answer FE’s queries. Cairn’s partner in the prolific Rajasthan oil field, ONGC, said on Thursday it was examining all the contractual and legal implications of the proposed deal. Cairn Energy Chief Executive Bill Gammell wrote to the government saying Vedanta, besides having a successful experience in executing and operating complex large scale industrial projects, has a culture of empowering management as evident in its previous acquisitions.
Cairn also confirmed that there are no planned changes in Cairn India’s organisation, standards, policies and systems. The transaction will have no effect upon Cairn India’s knowledge and experience as a contractor, operating to accepted international petroleum industry practice, Cairn informed the government. Vedanta Resources, he added, had the wherewithal to takeover the parent company guarantees that Cairn Energy had given for performance of obligations under PSCs. Vedanta had 10 times better financial capabilities than Cairn Energy. Cairn India holds 70% in the Rajasthan block that holds 6.5 billion barrels of oil reserves besides two other producing properties and seven exploration areas.