The mutual distrust has given rise to the need of a legal document where Cairn will give in writing that it will pay Rs2,500 per tonne cess on its share of production from the all- important Rajasthan oilfields and also makes royalty payments cost-recoverable
New Delhi: State-owned explorer Oil and Natural Gas Corporation (ONGC) on Tuesday decided to give its consent to Vedanta Resources for taking over Cairn India but only if the mining group and the subsidiary of UK’s Cairn Energy sign a legal pact on the royalty and cess payments, reports PTI.
The need for a legal document has arisen because Cairn India insisted on ONGC giving no-objection to the Cairn-Vedanta deal before agreeing to share royalty and pay cess on the all important Rajasthan oilfields.
“After detailed deliberations on pre-emptive rights and economic evaluation... the board of ONGC resolved that Cairn’s request (for consent to the $9 billion transaction) may be agreed to, subject to Cairn, Vedanta and their Affiliates executing a formal agreement with ONGC agreeing to the royalty and cess conditions,” ONGC said in a statement.
The board of ONGC met today and agreed to waive its pre-emption rights, an official said, adding that the no-objection certificate (NOC) will be issued when Cairn and Vedanta sign legal documents on royalty and cess.
Cairn India’s 97% owners, including parent Cairn Energy, and new management Vedanta had accepted the riders set by the government.
ONGC, for whom the Rajasthan project had been a losing proposition because it paid royalty not just on its 30% share but also on Cairn India’s 70% interest, has demanded an equitable sharing before the deal was cleared.
The mutual distrust has given rise to the need of a legal document where Cairn will give in writing that it will pay Rs2,500 per tonne cess on its share of production from the all- important Rajasthan oilfields and also makes royalty payments cost-recoverable.
The official said the NOC can be given in a week’s time.
SBI Caps, appointed by ONGC to advise on exercising its pre-emption rights, has opined that the Rs355 a share price that Vedanta is paying Cairn Energy for buying a majority stake in Cairn India is too high a price.
Cairn India does not pay any royalty on its 70% stake in the Rajasthan fields. Royalty, as per the contract, is paid by state-owned ONGC, which got a 30% stake in the 6.5 billion-barrel-field for free.
However, even before the $9.6 billion Cairn-Vedanta deal was announced in August last year, ONGC had demanded that like all other taxes, royalty should be added to the project costs, considering it as revenue earned from oil sales before profits were split between partners.
Cairn had opposed this as it would lower its profitability and had also initiated arbitration against the government contesting its liability to pay oil cess on its share. It believed that cess, like royalty, was also the liability of ONGC.
ONGC said Cairn India had sought NOC from it for transfer of control in not just Rajasthan block but four other oil and gas discovery areas.
“ONGC, while evaluating Cairn’s request to issue them NOC for the proposed transaction and its option of exercising pre-emptive rights, carried out the valuation of the proposed transaction with the help of SBI Capital Markets,” it said.
“After detailed deliberations on pre-emptive rights and economic evaluation, and as Cairn has agreed to the two conditions relating to cost recovery of royalty and withdrawal of Cess arbitration case in respect of RJ-ON-90/1, the board of ONGC resolved that Cairn’s request as above may be agreed to...,” it added.
In a postal ballot earlier this month, 97% of Cairn India’s shareholders—including Cairn Energy (52.1%) and Vedanta (28.5%)—had voted for acceptance of the government conditions so that the transaction can be concluded.
The company board, which met on 14th September, accepted the shareholders’ mandate but added a caveat that the conditions would be accepted only upon receiving a NOC from ONGC.
TRAI has received comments from various stakeholders on technology and provisions that can be made for handling issues related to lost mobile phones and is expected to announce some measures in another 15 to 20 days, its chairman JS Sarma said
New Delhi: The Telecom Regulatory Authority of India (TRAI) is gearing up to issue the much awaited recommendations on blocking of IMEI of lost and stolen mobile handsets, reports PTI.
“I think we should be able to do it in another 15 to 20 days,” TRAI chairman JS Sarma told reporters here.
TRAI had been working on this issue since 2004 and issued consultation paper again on 2 November 2010.
The Authority has also received comments from various stakeholders on technology and provisions that can be made for handling issues related to lost mobile phones.
This recommendation will be followed by two regulations—Telecom Consumers Protection Regulations (TCPR), 2011 and The Telecom Consumers Complaint Redressal Regulations (TCCRR), 2011— benefiting consumers.
“Before the end of October, we will issue comprehensive guideline on grievances redressal mechanism and in that again we are building what is called telecom consumer grievance monitoring system where TRAI would be able to track complaint of consumers,” Mr Sarma said.
TCCCPR is to strengthen complaints redressal of complaints registered by telecom consumers and objective of TCPR is to protect consumer from falling in trap of hidden terms and conditions of telecom service providers.
“We in TRAI cannot directly handle complaints of consumer but it is our task that systems are put in place and it is task of service provider to ensure that complaints are actually taken up in-time,” Mr Sarma said.
Early this year, TRAI was able to implement mobile number portability regulation which allows user to change their operators without changing their existing number.
“Till date around 20 million subscribers have requested for MNP and 15 to 16 million subscribers have changed their operators. There are more than 100 thousand porting request being made every day,” Mr Sarma said.
On a review of the current ECB policy, it has been decided, in consultation with the government to allow Indian companies which are in the infrastructure sector to avail of ECBs in renminbi (yuan), under the approval route, RBI said in a notification
Mumbai: The Reserve Bank of India (RBI) on Tuesday allowed infrastructure companies to raise funds in the Chinese currency yuan up to $1 billion to fund infrastructure development in the country, which requires investment to the tune of $1 trillion in next five years, reports PTI.
On a review of the current external commercial borrowing (ECB) policy, it has been decided, in consultation with the government of India, to allow Indian companies which are in the infrastructure sector, to avail of ECBs in renminbi (yuan), under the approval route, RBI said in a notification.
This is subject to an annual ceiling of $1 billion pending further review, it said.
Once approved, it said the approval of the RBI will be valid for a period of three months from the date of issue of the approval letter and the loan agreement should be executed within the validity period.
It is to be noted that the government has already said that the infrastructure sector requires investment of $1 trillion during the 12th Plan (2012-17). Of this 50% would come from the private sector.
Banks will be permitted to open Nostro accounts in renminbi (RMB). The designated bank shall monitor the end-use of funds and bank in India will not be permitted to provide any form of guarantee, it said.
The amended ECB policy will come into force with immediate effect and is subject to review, it said.
On Monday, the RBI relaxed ECB norms for the infrastructure companies with foreign stake.
Direct foreign equity holder (holding minimum 25% of the paid-up capital) and indirect foreign equity holder with at least 51% of the paid-up capital, will be permitted to provide credit enhancement for the domestic debt raised by Indian companies engaged exclusively in the development of infrastructure through issue of capital market instruments, it said.
It includes Infrastructure Finance Companies (IFCs) and no prior approval will be required from the RBI for providing such credit enhancements, it said.
The company fulfilling foreign equity criteria does not require permission for raising ECB up to $5 million.