Oil Min drops clause of Cairn foregoing future legal rights
In the cabinet note prepared by the oil ministry pertaining to the USD 9.6 billion Cairn-Vedanta deal, some of the earlier 11 pre-conditions have been watered down. And, this is a result of the law ministry saying clauses such as Cairn foregoing its future legal rights to future arbitration are not tenable.
March 04, 2011 / 11:55 IST
In the cabinet note prepared by the oil ministry pertaining to the USD 9.6 billion Cairn-Vedanta deal, some of the earlier 11 pre-conditions have been watered down. And, this is a result of the law ministry saying clauses such as Cairn foregoing its future legal rights to future arbitration are not tenable, reports CNBC-TV18's Nayantara Rai quoting sources from the oil ministry.
The law ministry has also said that as per law, all parties must mutually agree to all of the pre-conditions.However, the stalemate on Cairn withdrawing the cess arbitration and agreeing to royalty at Barmer being cost recoverable very much carries on.The oil ministry is sticking to its earlier stand, and sources indicate Cairn recently told the oil ministry that Vedanta may pull out of the deal if it agrees to these concessions. Sources say the oil ministry feels Cairn should have made adequate disclosures to Vedanta on these two outstanding issues prior to the deal announcement.The oil ministry is now looking at a second option, that is, of the government giving its consent to the deal while reserving its rights on both the royalty and cess issues.Sources say the oil ministry will use all legal recourses as far as the cess issue is concerned and as for counting royalty as cost recoverable, it will in the future take appropriate decisions to enforce the provisions of the production sharing contract. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
