Even as the Vedanta Group of Anil Agarwal has announced a restructuring of group assets under which Sesa Goa and Sterlite will be merged and the group's holdings in Cairn India transferred to the new merged entity, a new threat is headed its way.
Prashant Bhushan of the Centre for Public Interest Litigation (CPIL)) has lobbed a new case in the Supreme Court on Monday asking it to cancel the government of India's approval for the Cairn Energy-Vedanta deal on the ground that the country would be losing over Rs 1,00,000 crore in the process.
The PIL says that Oil & Natural Gas Corporation (ONGC), as 30 percent owner of Cairn India, had the right of first refusal (ROFR) in case Cairn Energy wanted to sell its 70 percent stake in the Indian company, which struck oil in Rajasthan.
But instead of allowing ONGC to exercise its ROFR, the government approved the Carin-Vedanta deal and merely asked Cairn India to take over the royalty payments that ONGC had been shouldering so far.
The PIL says that if ONGC had acquired a 41 percent additional stake from Cairn Energy, as it was entitled to under ROFR, it would have gained more. But by not exercising the ROFR, it lost out on more than Rs 1,00,000 crore worth of oil.
The loss calculations are based on Cairn's Rajasthan oil selling at around $100 a barrel and on the basis of a total of 1.4 billion barrels of recoverable oil from the field.
See the PIL text here:
The PIL asks for the following decisions from the court:
• Cancellation of the government's approval for the deal
• Direction to ONGC to exercise its ROFR on same terms as offered to Vedanta
• Direction to the Central Bureau of Investigation (CBI) to investigate why ONGC did not exercise its legal rights
• Direction to CBI to investigate why ONCG was made liable for whole of royalty when it owned only 30 percent of the Rajasthan field
• Direction to the CBI to investigate how Cairn was given extension of time to complete its Rajasthan explorations
• Direction to the Comptroller and Auditor General to calculatethe losses incurred by ONGC by paying 100 percent of royalty before the Cairn-Vedanta deal
Quite clearly, Vedanta's headaches on the Cairn deal are far from over.
Updated Date: Dec 20, 2014 06:41:42 IST