Indian State-run Oil Firms Not to Offer Counter-bid for ‘Cairn India’
Much touted counter-bid for 'Cairn India' by state run oil firms seem to run into troubled waters. Vedanta Resources has made an agreement with Britain based company Cairn Energy's India wing 'Cairn India' to purchase its majority stake in India for $9.6 billion a week ago. State run energy firm ONGC (Oil and Natural Gas Corporation) owns 30% shares in Cairn India. It has been on the news that ONGC may not agree to the bid as it wants to exercise its right to 'first reject' and may offer a counter bid.
Yesterday Indian Commerce Minister Anand Sharma also told the media while announcing annual Foreign Trade Policy (FTP) that the natural resources were strategic assets for the country and foreign companies might not be allowed to own India's resources, as if they didn't allow foreign private companies so far to own up any other natural resource in India. He also said ONGC should have a say on acquisition deal. Actually, the government has sanctioned several SEZs (supposed to be foreign territories on Indian soil as per SEZ act) throughout India and several more are waiting for approval.
It was also informed that ONGC, along with other state run energy firms GAIL India and Oil India may place counter-offer for Cairn India. Cairn India owns a large oil block in Rajasthan state in which ONGC has 30% stake. As Cairn Energy's parent company has needed to finance its operations at some other region it has offered to sell its India operations. U.K. based and India-focused Vedanta Resources immediately stepped in to own it up and the two parties have reached an agreement by which Vedanta would pay Rs. 405 a share for 40% to 51% stake. It was also agreed to pay another Rs. 50 a share so that Cairn Energy may not compete against Vedanta in oil exploration in India.Continued on the next page