The planned sale of a majority stake in Scottish -owned oil firm Cairn India for up to £6billion could hit further delays, it emerged yesterday.
India’s oil minister, S. Jaipal Reddy, said the views of finance, law and corporate affairs ministries would be sought before the deal went before the country’s cabinet for approval.
Edinburgh-based explorer Cairn Energy, led by chief executive Sir Bill Gammell, has agreed to sell a controlling interest in the Rajasthan-focused business to mining giant Vedanta Resources, setting a target date of April 15 to seal the deal.
Indian government approval for the deal has already been slowed by a disagreement over royalties.
Mr Reddy said: “It is too big for one ministry to decide on it. It may go to the cabinet in two to three weeks.”
The sale would be the biggest in the Indian oil sector and help to improve investor sentiment toward the business climate in Asia’s third biggest economy.
Mr Reddy’s remarks, however, signal that a government decision could go beyond April 15 because the cabinet is busy with the forthcoming budget session of parliament in addition to political firefighting amid a wave of damaging corruption scandals.
Himanshu Arora, a research analyst at the Religare Commodities division of global financial services group Religare Enterprises, said: “The deal may take more time to settle but there will not be huge delay as it is being keenly watched by the rest of the world for evaluating India as an investment destination.”
State-controlled explorer ONGC owns a 30% stake in some of the assets up for sale but pays 100% of the royalties.
Mr Reddy repeated earlier government assurances that ONGC’s interests would be protected.
On January 30, ONGC’s chairman at the time R.S. Sharma said his firm would end up paying a royalty of £1.9billion on crude output from Cairn’s Rajasthan fields under a production plan submitted to the government.