Petroleum minister Jaipal Reddy (centre) with Haryana chief minister Bhupinder Singh Hooda (left) and minister for culture Kumari Selja in Panipat on Tuesday. (PTI)

New Delhi, Feb. 15: The Cabinet Committee on Economic Affairs is expected to take the final decision on Cairn India’s stake sale to Anil Agarwal’s Vedanta Resources.

“It (stake sale) is too big for one ministry to decide … It will go to the cabinet in 2-3 weeks. The views of finance, law and corporate affairs ministries would be sought before the deal goes to the cabinet,” petroleum minister Jaipal Reddy said.

The dispute in the $9.6-billion deal is over the excess royalty Oil and Natural Gas Corporation (ONGC) pays on behalf of Cairn India for the oil fields in Rajasthan.

“We cannot bail out any seller or buyer. We will not compromise on the concerns of ONGC … The claim of ONGC that royalty should be a cost recoverable item is being supported by us,” Reddy said.

ONGC pays royalty both on its 30 per cent share of oil from the Rajasthan block and Cairn India’s 70 per cent share, making the nation’s largest onshore fields a losing proposition for the PSU.

Cairn says ONGC is also contractually bound to pay a cess of Rs 2,500 per tonne on the projected output of 12 million tonnes over the entire lifespan of the fields.

The oil ministry wants the twin liability of Rs 21,800 crore on ONGC to be addressed before giving its approval to the Vedanta deal. However, Cairn and Vedanta are opposed to the proposal to make the partners share the levies equitably.

Sources said the oil ministry did not want to be seen as acting in a partisan manner.

CPM leader Tapan Sen in a letter to Prime Minister Manmohan Singh said, “Oil being a natural resource, which is owned by the people of this country, no decision on this deal should be taken through back door manoeuvres… (we seek) immediate intervention to avoid a future embarrassment of not being apprised on a multi-billion deal, which may very well turn into a scam.”

Sen demanded that the details of the oil field assets of Cairn India vis-à-vis its short-term and long-term viability and valuation be brought in public domain. These issues need to “be brought in public domain through Parliament, before any takeover of national resources like oil by fly-by-night operators”.

A Cairn Energy spokesman said, “Cairn continues to work with the government to secure the necessary consents and approvals to complete the proposed transaction with Vedanta by April 15.”

A CCEA approval by month-end may just give enough time to the Vedanta group to complete an open offer to buy an additional 20 per cent from Cairn India’s minority shareholders by April 15. Any delay beyond February would leave very little time for Cairn and Vedanta to conclude the deal.

Meanwhile, Standard & Poor’s today said Vedanta’s operating risk would increase if it acquired Cairn India, as the British entity would be venturing into a new line of business.

Oil subsidy

Reddy was in Panipat to dedicate IOC’s naphtha cracker complex to the nation. While ruling out a hike in fuel prices, he said the government would subsidise half of the losses borne by the oil companies for selling fuel below cost.