April 5: The Cabinet Committee on Economic Affairs headed by the Prime Minister, Dr Manmohan Singh is likely to clear the London-listed mining group Vedanta Resources’ $9.6 billion acquisition of Cairn India on Wednesday after overruling the law ministry’s opinion on state-owned Oil and Natural Gas Corporation’s (ONGC) rights.
“The Cabinet Committee on Economic Affairs (CCEA) has been scheduled for Wednesday afternoon. In all likelihood, it will give an in-principal approval to the Cairn-Vedanta deal,” an official privy to the development said. The Cabinet panel may overrule opinion of the solicitor general of India that Vedanta must agree to equitably share royalty on oil produced from Cairn India’s mainstay Rajasthan oilfields before the government nod. “The pre-condition will be overruled by arguing that the government’s take from the Rajasthan oilfields will be impacted if Rs 18,000 crore royalty that ONGC will pay in excess of its share in the oilfields is cost recovered from revenues,” the official said. “The government revenues will be dented by $1 billion.” Incidentally, the government is committed to reimbursing in full the royalty ONGC pays in excess of its 30 per cent share in Rajasthan oilfields in case it is not cost recovered.