Govt, Cairn, Vedanta to meet on Feb 6: Sources

India's oil secretary may meet Cairn Group and Vedanta Resources on Sunday, ministry and company sources said, to try to hammer out royalty payment issues that threaten the multi-billion dollar takeover of Cairn India. 

It could be the last meeting with the parties to the deal before the oil ministry firms up its view -- which will be the clincher for whether the deal goes ahead. 

On Jan. 31, Oil Minister Jaipal Reddy said that Oil Secretary S. Sundareshan would meet all stakeholders for the planned acquisition deal at the end of this week. 

"There will be one more interaction at the end of the first week of February. Situation in its final contours will be known then," Reddy said. 

Cairn Energy agreed in August to sell 40-51 percent inCairn India to Vedanta but the deal has been delayed on rumblings from the government and its partner in the big Rajasthan block, Oil and and Natural Gas Corp. 

State-owned ONGC , which has a 30 percent stake in Cairn-operated Rajasthan fields and pays royalty on the entire output, said it would not block the planned deal but wanted the royalty issue to be resolved at the earliest. 

The oil ministry has been maintaining that it has nothing against the deal but it would strive to protect ONGC's interest. 

ONGC's then chairman R. S. Sharma on Jan 30. said his firm would end up paying a royalty of 140 billion rupees ($3.1 billion) on crude output from Rajasthan fields as per the production plan submitted by the private firm to the government. 

Citing persons with direct knowledge of the matter, the Economic Times of India on Friday reported that Vedanta will terminate the $9.6-billion deal if Cairn India accepts the oil ministry's conditions like changing the royalty obligations in the Rajasthan block. 

Vedanta seals $6 bn financing for Cairn India deal

India-focused mining group Vedanta Resources Plc agreed a $6 billion financing deal with a consortium of banks to help fund its proposed acquisition of a majority stake in the Indian unit of Cairn Energy. 

London-listed Vedanta said in a statement the financing would be structured in four tranches, with maturities of between 18 months and three years. 

The bank consortium comprises Barclays Capital, Citi, Credit Suisse, Goldman Sachs, J.P. Morgan, Morgan Stanley, Royal Bank of Scotland and Standard Chartered. 

General syndication will be launched shortly. Vedanta announced a deal in August to buy a stake of 51-60 percent in Cairn India for $8.5 billion to $9.6 billion. 

On Tuesday, UK's Cairn Energy said there was no guarantee its planned sale of the stake would proceed, but still hoped to close the deal in the first quarter of 2011. 

Cairn Energy has applied for government nod in seven out of the 10 properties held by Cairn India. It has not sought government approval and consent of partner Oil and Natural Gas (ONGC) in the three producing properties including the giant Rajasthan block, that has triggered a war of words. 

Both Oil Ministry and ONGC , which holds stake in most of Cairn India's properties, have contested this view and have got legal opinion backing their claim. They feel the deal is effective transfer of control and so ONGC's pre-emption rights are triggered. 

Vedanta was to get shareholder nod for the deal by October 30 but has not yet posted a notice for a shareholders meet. Its mandatory open offer for additional 20 per cent stake in Cairn India too missed the October deadline as market regulator SEBI is yet to give its approval for the same.