Cairn India may not take up Vedanta deal at Aug 18 AGM

[bingogo]

Posted: Thursday, Jul 21, 2011 at 0313 hrs IST

New Delhi: Cairn India on Wednesday sounded unsure of the fate of the $9 billion deal as it is yet to receive an official intimation about the government decision.

The cabinet committee on economic affairs (CCEA) cleared Cairn Energy’s proposed majority stake sale in its Indian business to Vedanta Resources at its meeting on June 30. Cairn India, which has scheduled an annual general meeting on August 18, is also not sure of placing the deal on the agenda for shareholder approval, persons privy to the development said.

Cairn India chairman Bill Gammell said in the company’s annual report for 2010-11 that the energy major has faced “considerable uncertainty arising out of the proposed transaction.”

The uncertainty pertains to running the business, for which the co-operation and support of the government and Cairn’s joint venture partner ONGC is essential.

Cairn said that it will define appropriate responses on receiving a formal communication from the petroleum ministry about the CCEA’s decision.

“Unfortunately, the transaction has been dogged by serious delays, objections by ONGC and major interventions by the ministry of petroleum and natural gas,” Gammell said.

Chief executive officer of Cairn India, Rahul Dhir said in his message to shareholders that since the company is yet to receive a letter from the ministry on the CCEA’s decisions, it is inappropriate to comment on its “unsubstantiated contents.”

Cairn also said that taking into account the expected higher production from Rajasthan later this year, it has tied up with crude buyers for 1,55,000 barrels a day, up from the current 1,25,000 barrels a day. Output is expected to grow on account of commissioning the Bhagyam field in Rajasthan in the second half of the year.

IOCL’s Koyali refinery will get Rajasthan crude in the third quarter of calender year 2011, Cairn said. Once the Bhogat terminal on the Arabian sea cost becomes operational later this year, sales to other coastal refineries will also be possible subject to government approval, Cairn said.

Rajasthan crude’s pricing is based on Bonny Light - a comparable low sulphur crude that is frequently traded in the region.