Oil ministry says Cairn responsible for delay
07 March 2011
While refuting the UK prime minister, David Cameron's allegations that "unexpected regulatory hurdles" were delaying the $ 9.6-billion Cairn-Vedanta deal, the oil ministry said the British firm was responsible for the deferment.
"Cairn Energy - which has agreed to sell a majority share in its Indian subsidiary to Vedanta, faces unexpected regulatory hurdles which are causing delay and could block the deal entirely (which is very time-sensitive) - thus preventing Cairn investors from legitimately exiting the market," Cameron wrote to prime minister Manmohan Singh recently.
Responding to the British prime minister's contention, the oil ministry told the Prime Minister's Office that Cairn Energy had taken over three months to comply with regulation of seeking formal approval for selling most of its stake in Cairn India to Vedanta.
According to knowledgeable sources, the ministry stated that the final applications had been received only in end November, over three months following the announcement of the deal on 16 August, 2011.
It was pointed out that as per the terms of the production sharing contracts signed by Cairn and its units, it was required that a prior permission from the Indian government be taken for the proposed stake transfer.
Without paying heed to the stipulation, Cairn said that no such governmental consent was necessary and only following considerable pressure did the company apply to the government for its approval, the ministry pointed out.