Vedanta offers govt, ONGC seats on Cairn board – Illegal


 

 TNN | Mar 24, 2013,
NEW DELHI/BARMER: NRI metals and mining tycoon Anil Agarwal is willing to offer the oil ministry and state-run explorer ONGC a seat on the board of Cairn India, even as the Vedanta group firm started pumping oil from its third field in the Barmer block and began commercial gas supply from the acreage.

“Instead of having management committee (oversight panel for a field) and various levels (of approval), ONGC and petroleum ministry can put their nominee on board of Cairn to cut approval process and expedite decision making,” PTI quoted Agarwal as saying at the function to mark commercial gas supply from the Barmer block.

Industry experts say putting a ministry representative on the board of a private firm under its watch is not feasible due to legal and regulatory issues. Besides, such a move would give rise to conflict of interest and may not be passed.

Even for ONGC, which is Cairn’s 30% partner in Barmer, a Cairn board position does not look feasible since it has no stake in the former. Even if Cairn shareholders make an exception for ONGC, it would perhaps ease communications between the partners and shorten the planning process for the field. But approvals would still have to be sought from the ministry, its technical arm or the oversight panel.

To that extent, Agarwal’s offer is to be seen as an expression of his frustration with the slow decision-making process in the government. His Vedanta Resources had entered a deal to buy Edinburgh-based Cairn Energy Plc‘s majority stake in its Indian unit in August 2011 for $8.6 billion. But it took over 16 months for the deal to get all regulatory clearances. Thereafter, the ministry took more than a year to allow Cairn to conduct additional exploration in the field.

(With inputs from PTI)

 

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