Cairn-Vedanta deal: Oil ministry seeks Cabinet’s final appro



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Message Lun 9 Jan 2012 13:27

Cairn-Vedanta deal: Oil ministry seeks Cabinet’s final appro

9 Jan, 2012, 03.44AM IST
Cairn-Vedanta deal: Oil ministry seeks Cabinet’s final approval

NEW DELHI: Cairn and Vedanta Resources may have jumped the gun in concluding the $8.5-billion deal before they received the government's formal approval, but the oil ministry has recommended to the Cabinet that the transaction that was conditionally cleared in June should get the final consent, officials said.

Vedanta has already paid the money to Cairn for acquiring the controlling stake in Cairn India and appointed its nominees on the board.

The home ministry has also cleared the deal, but along with the approval, it has placed on record various environmental, regulatory and human rights issues that Vedanta has faced in recent years.

This triggered discussions between the government and the companies involved in the deal, and the CEOs of Cairn, Cairn India and Vedanta wrote to the oil ministry saying they were aware of the issues raised by the home ministry and that the oil ministry would deal with the matter "as appropriate", a government official said.

The oil ministry was not moved by the home ministry's concerns, and could not see why the deal should be influenced by factors such as Norway's government pension fund selling share of Vedanta, tribal protests in Niyamgiri and Lanjigarh in Orissa and the concerns of the Church of England about the group's human rights record.

The oil ministry has sought the approval of the Cabinet Committee on Economic Affairs to issue security clearance for the deal to Vedanta and said home ministry's concerns about the views of the Church of England and a foreign pension fund had "no bearing whatsoever on the security aspects".

Cairn India's director for corporate affairs, Manu Kapoor, declined comment, while the oil ministry and Vedanta did not respond to ET's queries. Oil ministry officials said that the deal was poised to obtain final clearance but added that companies could not take this for granted.

"Though, both MHA and petroleum ministry have recommended Cabinet Committee on Economic Affairs for granting an unconditional security approval, uncertainty is not yet over till CCEA's verdict is out," one official who did not wish to be identified said.

Officials said that on December 7 Cairn and Vedanta had informed the oil ministry that they had fulfilled all conditions set by the Cabinet and the transactions were being completed. On December 15, the companies informed stock exchanges that the multi-billion acquisition of Cairn India was completed.

Days before the companies informed stock exchanges about completion of the acquisition and subsequently appointment of three Vedanta representatives in its board, the oil ministry officials had cautioned the government about MHA's observations.

In an internal note dated December 12 (reviewed by ET), the oil ministry had said that the ministry could ask companies "to await further instructions from the government before concluding the transaction."


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Message Mer 11 Jan 2012 11:43

On pause for over a year, Cairn-Vedanta gets PMO push

On pause for over a year, Cairn-Vedanta gets PMO push
Amitav Ranjan : New Delhi, Wed Jan 11 2012, 02:02 hrs

With the Petroleum Ministry blocking the Cairn-Vedanta deal on one pretext or the other for more than a year, the Prime Minister’s Office has taken charge to speed up the government approval.

Last month, the PMO directed Cabinet Secretary Ajit Kumar Seth to expedite the proposal for Cabinet approval after two reminders to the Ministry to provide an “updated status in the matter” failed to elicit a reply.

“The undersigned is directed to request the Cabinet Secretary to propose the note for Cabinet Committee on Economic Affairs on the subject at the earliest,” Joint Secretary to PM wrote on December 27.

The PMO does not interfere in any Cabinet proposal which is the domain of the administrative ministry.

Since the PMO’s directive, Petroleum Ministry officials are working overtime to finalise the CCEA note for the $8.48-billion deal which has been hanging fire since Cairn Energy Plc first applied in September 2010 to transfer its Cairn India Ltd shares to Vedanta Resources Plc.

The ministry, then under Murli Deora, had sought fresh applications from Cairn stating that the share transfer required the government’s nod. When that request came in November 2010, the ministry set pre-conditions for approval — a move ratified by the CCEA last June.

When all clearances and pre-conditions were achieved, the ministry decided last month to go back to CCEA for approval after the Home Ministry, while giving the security clearance, cited alleged global and domestic “transgressions” by Vedanta and its subsidiaries.
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