State-owned Oil and Natural Gas Corp
(ONGC) on Tuesday decided to give its consent to Vedanta Resources for taking over
Cairn India but only if the mining group and the subsidiary of UK's Cairn Energy sign a legal pact on the royalty and cess payments.
The need for a legal document has arisen because Cairn India insisted on ONGC giving no-objection to the Cairn-Vedanta deal before agreeing to share royalty and pay cess on the all important Rajasthan oilfields.
"After detailed deliberations on preemptive rights and economic evaluation... the Board of ONGC resolved that Cairn's request (for consent to the $9-billion transaction) may be agreed to, subject to Cairn, Vedanta and their Affiliates executing a formal agreement with ONGC agreeing to the royalty and cess conditions," ONGC said in a statement.
The Board of ONGC met on Tuesday and agreed to waive its pre-emption rights, an official said, adding that the no-objection certificate (NOC) will be issued when Cairn and Vedanta sign legal documents on royalty and cess.
Cairn India's 97 per cent owners, including parent Cairn Energy, and new management Vedanta had accepted the riders set by the government.
ONGC, for whom the Rajasthan project had been a losing proposition because it paid royalty not just on its 30 per cent share but also on Cairn India's 70 per cent interest, has demanded an equitable sharing before the deal was cleared.
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