Cairn's stake sale to Vedanta cleared

Cairn Energy has received the much delayed approval from Indian authorities to sell its 6.5bn stake in its Indian venture to Vedanta, media reports said Monday.

The group has also received a no objection certificate from Oil and Natural Gas Corporation (ONGC), its partner in the oil venture.

The transaction is expected to be completed in the coming days to allow Vedanta to take up a controlling stake in Cairn India.

Earlier this year, a new set of conditions for the sale was cleared by the Indian cabinet which included the sharing of royalty payments with ONGC. Until now, ONGC has been responsible for all royalty payments. The new rules also included the withdrawal of arbitration over a tax dispute.

Cairn Energy will now retain a 22 per cent stake in Cairn India. It expects that the resolution of the dispute over royalties will open the way for improved co-operation with ONGC and a rapid expansion of production in Rajasthan, which was stalled by the uncertainty surrounding the deal.

The revisions mean that Cairn Energy is no longer bound by non-compete terms set out in Vedanta’s original bid of August last year. The company can now explore for oil and gas in India separately from the Vedanta-controlled Cairn India.