India to decide on Vedanta-Cairn deal by year-end: official

11th October 2010, Comments 0 comments

India's government will decide by December whether to approve British firm Cairn Energy's proposal to sell a controlling stake in local arm Cairn India to resources giant Vedanta, an official said.

India's oil secretary S.Sundareshan gave the assurance to reporters in the capital, sayin: "We have two-and-a-half months."

London-listed resources and mining giant Vedanta in August announced an offer worth 9.6 billion dollars for a majority stake in Cairn India, whose most important asset is the oil-rich Mangala field in the western state of Rajasthan.

Cairn India holds stakes in 10 oil and gas blocks in the country and has tie-ups with ONGC, energy-hungry India's largest oil producer by output.

Reports suggest that Vedanta could buy up to 60 percent of Cairn India, in which Cairn Energy holds a 62.3 percent stake.

India's oil ministry says that under production-sharing contracts, a change in ownership of oil blocks calls for government approval.

Vedanta group chairman Anil Agarwal said on Monday the company did not plan to raise its offer price of 355 rupees (7.9 dollars) per share for minority shareholders of Cairn India.

Cairn India shares closed up 2.13 percent, or 7.12 rupees, at 345 rupees on Monday and Sterlite Industries, the local subsidiary of Vedanta group, rose 3.13 percent, or 5.45 rupees, to 179.35 at the Mumbai stock exchange.

Vedanta has run into controversy over a mining project in the eastern state of Orissa, which was fiercely opposed by local tribal villagers, environmental and human rights campaigners, plus the Indian government.

Earlier this month, Vedanta won a reprieve from India's Supreme Court, which put on hold an order to shut down a massive copper smelter owned by Sterlite, in the southern Indian town of Tuticorin.


-- Dow Jones Newswires contributed to this report --

© 2010 AFP

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