New Delhi: Contrary to UK-based Cairn Energy Plc's claim that it does not need government approval for the sale of a stake in its India unit to Vedanta Resources, the country's top law officer has ruled that specific approvals are required for all 10 oil and gas properties changing hands, reports PTI.
The law ministry, as well as the Solicitor General of India (SGI) have opined that government approval is contractually required before a controlling stake in Cairn India, a company that operates the country's largest oilfield in Rajasthan, are sold off to Vedanta, highly placed sources said.
Cairn Energy, which is selling up to a 51% stake in Cairn India to Vedanta for up to $8.48 billion, has been selective in seeking government approval and had last month applied for formal approval for only seven non-producing exploration blocks.
It maintains that such consent was not required in the case of producing properties like the RJ-ON-90/1 block in Rajasthan, the Ravva oil and gas field in the eastern offshore and the CB/OS-2 gas field in the Cambay Basin, off the Gujarat coast, as they were awarded prior to the advent of the New Exploration Licensing Policy (NELP) in 1999.
Sources said the second highest law officer of the country, the SGI has also opined that the deal will trigger Oil and Natural Gas Corporation's (ONGC) pre-emption or right of first refusal (RoFR) to acquire its partner's stake in blocks where the state-owned oil and gas firm is a participant.
The state-owned firm is a 30%-50% partner in each of Cairn India's three producing properties, as well as some NELP blocks like KG-DWN-98/2 in the Krishna-Godavari Basin, where gas has been discovered.
As such, besides government approval, Cairn Energy would also need a no-objection certificate from partner ONGC for the sale of a majority stake in Cairn India to Vedanta.
Cairn Energy chief executive Bill Gammell had told PTI that ONGC's pre-emption rights would not be triggered as the Vedanta Resources deal was a corporate transaction involving the transfer of shares at the corporate level. Such rights, he said, would only have been triggered if it Cairn India was selling its assets to Vedanta.
ONGC has the remaining 30% in the Rajasthan block, which is at the centre of the Vedanta deal. The block, holding 6.5 billion barrels of reserves, currently produces 125,000 barrels per day of oil and is estimated to have the potential to produce 240,000 barrels of oil per day (12 million tonnes a year).
Sources said the SGI - whose opinion ONGC had sought after Cairn Energy flatly turned down the existence of any pre-emption rights in the way of its deal with Vedanta - cited the recent Supreme Court ruling in the Ambani gas dispute to state that all oil and gas fields in the country belong to the government and any change in their ownership have to be vetted by the government.
Mumbai: Leading domestic rating agency Crisil today said banks are likely to sharply hike their deposit rates in the second half (H2) as the lenders are expecting a strong revival in credit growth during the rest of the year, reports PTI.
Noting that the bankers' response to the steady monetary tightening steps by the Reserve Bank of India (RBI) has been measured and gradual in the first half of the year, Crisil expects sharper rate hikes in the second half, and says that this may be accentuated if the central bank effects any further rate hike in the second half.
"We believe credit offtake will be substantially higher in H2, because credit demand is by nature back-ended in our country, given the festive and agricultural harvest seasons in the second half. Moreover, banks have sanctioned loans to a slew of large infrastructure projects which have obtained the necessary approvals and mobilised equity, and may now begin to draw down loans," Crisil Ratings head Suman Chowdhury said.
In addition, he points out that steady industrial growth and strong Index of Industrial Production (IIP) numbers indicate that the manufacturing sector may soon look to put capital expenditure programmes on fast track, and need increased funding to meet working capital requirements.
The agency also noted that the interest rates have been firming up with several banks increasing both their deposit and lending rates in the first week of October.
New Delhi: Coal miner major Gujarat NRE Coke today said it would invest $450 million in its coal mines in Australia to take its total annual production capacity to six million tonnes in the next five years, besides creating 150 new jobs, reports PTI.
"The company has an expansion plan to ramp up the production level to 6 million tonnes per annum (MTPA) from both its mines by FY 2015. We have already invested $450 million in mine development activity and would be further investing another $450 million," Gujarat NRE Coke vice-chairman and managing director Arun Jagatramka told PTI.
"We presently are directly employing around 500 employees, which is expected to go up to 650," he said.
Gujarat NRE Coke, the country's largest independent producer of metallurgical coke - which is processed from coking coal - has two coking coal mines in Australia, with an annual production capacity of 2 million tonnes.
GNCL through its Australian subsidiary Gujarat NRE Coking Coal Limited, an ASX listed company, owns and operates two coking coal mines - NRE No1 Colliery and NRE Wongawilli colliery, in the New South Wales region.
Its Australian expansion plans include mine development, construction of access roads and purchase of services and equipment.
The mines, NRE No 1 Colliery and NRE Wongawilli Colliery, together produce about 1.3 MTPA of coking coal per year.
"The current level of production for the year ended 31 March 2010 was 1.13 MTPA and we expect to produce around 2 MTPA (operating at its full capacity) by the end of this financial year," Mr Jagatramka said.
Asked whether the company was looking to acquire more mines there, he said, "We are always on the look out for any good opportunity." The firm had last year failed in its bid to acquire Rey Resources, an Australian entity.
Also, Mr Jagatramka said that the company planned to strengthen its base in Australian oil and gas sector.
"The Gujarat NRE Mineral Resources Ltd owns licenses of two oil and gas exploration block in Australia through its step down subsidiary named Gujarat NRE Oil Ltd. We have planned to foray into oil and gas field in Australia through our associate company," Mr Jagatramka said.