Cairn to respond to SEBI on MRPL complaint soon

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In order to overcome any hiccups just before the opening of its initial public offering on Monday, Cairn India Ltd proposes to respond to the capital market regulator on the complaint filed by Mangalore Refinery and Petrochemicals Ltd (MRPL), a subsidiary of ONGC , regarding the evacuation of crude oil from Cairn's Rajasthan fields, at the earliest.

Confirming that its merchant bankers have received a communication from the Securities and Exchange Board of India (SEBI) to reply to the complaint filed by MRPL, a Cairn spokesperson told Business Line, "we are in the process of responding to SEBI."

Both Cairn and MRPL, however, declined to comment on the nature of the complaint. When contacted MRPL officials said, "whatever observations we had to make on their draft prospectus we have informed the regulator. All we want is that the position should be reflected clearly."

According to market reports, SEBI has asked Cairn to respond to a complaint from MRPL about who is responsible for the pipeline to move crude from the Rajasthan blocks. MRPL is the sole Government nominee for buying the crude oil produced by Cairn in Rajasthan. According to sources, MRPL's contention was that Cairn's IPO prospectus did not correctly reflect how the crude will be evacuated from the Rajasthan field. ONGC is a 30 per cent stakeholder in Cairn's Rajasthan fields, with Cairn having the balance stake.

As regards offtake of crude, the Cairn official said, "We are currently in the process of carrying out a study relating to evacuation of the crude and trying to get a comprehensive understanding of having a pipeline to transport the crude. We are also in active discussions with the Government of India and the third parties regarding the offtake of crude."

According to reports, as per the complaint filed by MRPL, Cairn's prospectus says that "the responsibility for the construction of a pipeline" is that of the Government of India and its nominee in the joint venture, in this case MRPL. But, according to MRPL, the production-sharing contract merely talks about "the evacuation of crude." There is no mention of a pipeline.

However, according to those in know of the developments, under the terms of production-sharing contract it is the nominee who is responsible for evacuation and selling of crude.

Taken from Business Line

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