ONGC-OIL-GAIL may bid to counter Vedanta's offer for Cairn

New Delhi, Aug 23 (PTI) State-owned ONGC, OIL and GAIL
may make a joint bid to counter Vedanta Resources' USD 8.48
billion offer for majority stake in Cairn India, and have
already got USD 10 billion in loan commitments from
international banks for the move.
Indian Oil Ministry is believed to be uncomfortable with
billionaire Anil Agarwal-owned Vedanta Group buying 51-60 per
cent of Cairn India for USD 8.48 to USD 9.6 billion and has
asked Oil and Natural Gas Corp (ONGC), Oil India (OIL) and
GAIL to cobble up a joint bid to rival the London-listed
miner.
The three firms have held informal talks on the joint bid
even as the ministry is looking at legal options to deny
Vedanta the approval necessary for conclusion of its deal with
UK's Cairn Energy Plc, which holds 62.37 per cent stake in
Cairn India, sources familiar with the development said
Monday.
"Deutsche Bank, Credit Suisse and UBS, the only three
leading bankers who are not in conflict with the Vedanta-Cairn
Energy deal, may be advising ONGC on the counter-bid," a
source said. ONGC is the leader of the consortium with at
least 50 per cent share. OIL and GAIL will each be 20-25 per
cent partners.
ONGC has got informal commitments for funding up to USD
10 billion for the takeover bid, another source said, adding
that the ONGC-OIL-GAIL consortium may make a bid at more than
the Rs 405 a share offered by Vedanta.
Industry observers, however, took a dim view of the state
owned firms taking ownership of Cairn India as it would not
add to energy security of the country because the oilfields
are already in India and producing and perhaps may not be able
to add any value beyond what has already been created.
Value would have been added only if the PSUs had used the
money to acquire oil property abroad, they feel.
The message such a move would send to investors is that
you can invest in India but cannot take money out, they said,
adding that this would not augur well just when the next
bidding for oil and gas blocks under the New Exploration
Licensing Policy is round the corner.
Oil Ministry, a source said, was against Vedanta
acquiring Cairn's stake because it was a non-oil company.
"They are operating under the presumption that Cairn India's
skill sets are in London whereas the fact is that it is Cairn
Energy which has leveraged on E&P skills of Cairn India. They
got qualified for the Iraqi bid round only on capabilities of
Cairn India."
Sources said the ministry feels it holds the trump card
on Vedanta-Cairn deal because it feels government approval is
must. On the other hand, Cairn Energy fells the Vedanta deal
is a corporate transfer and not sale of stake in an oil field
that would have triggered need for regulatory approvals.
Cairn Energy could have sold its shareholding in the
stock market and government could not have done anything, a
source said, adding that Cairn India as a company continues to
exist and only its shareholding is changing. PTI ANZ
KAB