Vedanta buyout of Cairn, another 2G in the making: CPI-M MP

A CPI-M member asked Prime Minister Manmohan Singh to reject approval to "a fly-by-night operator" with no experience in oil sector.

Last Updated: Mar 09, 2011, 17:36 PM IST

New Delhi: Warning of a 2G spectrum-like scam
in London-listed mining group Vedanta Resources` USD 9.6
billion buyout of Cairn India, a CPI-M member today asked
Prime Minister Manmohan Singh to reject approval to "a
fly-by-night operator" with no experience in oil sector.

Tapan Sen raised the issue during Zero Hour in Rajya Sabha
and also wrote to Prime Minister seeking a valuation of Cairn
India`s mainstay oilfields in Rajasthan by CAG before the
Cabinet clears the deal.

Sen pointed out the "dubious" track record of Vedanta
which was barred from mining bauxite in Orissa.

State-owned Oil and Natural Gas Corp (ONGC), which is a
30 per cent partner in the Rajasthan oilfields, had found the
price Vedanta is paying to UK`s Cairn Energy Plc as too high,
he wrote to the Prime Minister, adding that the billionaire
Anil Agarwal-run firm is "jumping into a multi-billion
overvalued deal, for philanthropic mission."

Citing recent Supreme Court ruling that true owner of
natural wealth and resources are the people as a nation, he
said "allowing access to a vital natural resources like oil to
a fly-by-night operator, with no experience in the field and
without expertise even in asset-evaluation will not be in the
interest of national development."

"I therefore again urge upon you to bring the deal
transparently in public domain through Parliament immediately
to avoid another 2G like situation in the days to come," he
wrote to the Prime Minister.

In the Upper House, Sen, who is also a member of the
Standing Committee on Petroleum and Natural Gas, alleged that
the government was facilitating the deal.

Oil Ministry has already watered down some of the
preconditions it had earlier set for clearing the deal and the
stage now looks set for the USD 9.6 billion deal getting a nod
from the Cabinet Committee on Economic Affairs next week.

It has almost withdrawn the demand that Rs 21,802 crore
that ONGC has to pay in royalty and cess on behalf of Cairn
India on the Rajasthan oilfields should be equitably shared.

ONGC owns a 30 per cent stake in the Rajasthan block, but
pays royalty on the entire quantum of crude oil produced from
the fields. Over the life of the field, the royalty burden
works out to Rs 18,000 crore, of which ONGC has to also bear
Cairn`s share of about Rs 12,600 crore.

Cairn has also disputed liability to pay Rs 2,500 per ton
cess on its 70 per cent share of production from the Rajasthan
block, which totals to Rs 9,202 crore for ONGC.

"Vedanta must not be allowed to takeover Cairn India Ltd,
or, for that matter, the Mangala oilfield (the largest field
in the Rajasthan block)," Sen said.

ONGC by virtue of its stake in 8 out of the 10 properties
held by Cairn India in the country has pre-emption rights and
should "assert its rights," he added.

PTI

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