Royalty issues could derail Cairn-Vedanta deal

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Royalty issues could derail Cairn-Vedanta deal

A USD 10 billion deal for Vedanta Resources to take control of Cairn India and step into the lucrative oil business could falter due to an Indian state-run partner's concerns over royalties, reports the Economic Times.

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A USD 10 billion deal for Vedanta Resources to take control of Cairn India and step into the lucrative oil business could falter due to an Indian state-run partner's concerns over royalties, reports the Economic Times .

Oil Minister S. Jaipal Reddy said on Tuesday that state-run Oil and Natural Gas Corp's (ONGC) concerns over the royalties must be addressed for the deal, keenly awaited by shareholders and seen as a barometer of India's investment climate, to go through.

ONGC owns 30% of a block in Rajasthan which pumps Mangala crude. Under an agreement drawn up with Cairn when it was fully state-owned and India needed to tempt investors into its budding exploration programme, it pays all the royalties.

Source: The Economic Times