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| Gammell: Optimistic |
New Delhi, March 16: Bill Gammell, CEO of the UK’s Cairn Energy, is hopeful of Cairn India’s stake sale to Vedanta Resources meeting the April 15 deadline.
“I am positive and hopeful. I see the transaction going forward. We had a positive and constructive dialogue with the government. We have clearly told the government that we will stick to the April 15 deadline,” Gammell told reporters after meeting petroleum secretary S. Sundareshan here today.
The $9.6-billion deal will be brought up before the cabinet committee on economic affairs (CCEA) because of a controversy over the excess royalty state-owned Oil and Natural Gas Corporation pays on Cairn India’s oilfields in Rajasthan. The CCEA is expected to take a call on the stake sale soon.
“We will stick to the April 15 deadline. It’s in the government’s hand and the government has to take a decision,” Gammell said.
The oil ministry, sources said, will present two options to the cabinet while seeking its approval. One suggestion is to make Cairn accept partner ONGC’s claims on royalty and abide by the government’s directives on paying cess.
Alternatively, the government should clear the deal but use legal means to enforce provisions of the contract about recovering the royalty cost from the field’s revenue before calculating profit.
ONGC pays royalty not just on its 30 per cent share of oil from the Rajasthan block but also on partner Cairn India’s 70 per cent share.
Cairn says ONGC is also contractually bound to pay Rs 2,500 per tonne cess on all of the 12 million tonnes of projected crude oil output from the prolific Rajasthan fields.
The oil ministry wants the twin liability of Rs 21,800 crore on ONGC to be addressed before allowing Vedanta to buy most of the 62.4 per cent stake held by Cairn Energy in Cairn India.
However, Cairn and Vedanta are opposed to the ministry’s proposal to make the partners share the levies equitably. ONGC is claiming pre-emption rights, or right of first refusal, over the deal, defending its position on the basis of its stake in eight out of the 10 oil and gas properties held by Cairn India.
