Resource giant Vedanta's long-delayed bid to buy a majority stake in the Indian unit of Cairn Energy will go to the cabinet for a final decision within two weeks, a minister said Friday.
Cairn Energy has called the government's ruling on the proposed $9.6-billion deal -- one of the biggest takeovers in Indian corporate history -- a litmus test for India as it seeks to woo foreign investors.
The government's announcement came after a ministerial group, headed by Finance Minister Pranab Mukherjee, met to consider the bid, which has been in limbo for nearly 10 months, but did not disclose its recommendation.
"The GOM (Group of Ministers) has looked at various aspects of the deal. It has taken a view on the matter," Oil Minister S Jaipal Reddy told reporters..
"This view will be presented to the Cabinet Committee on Economic Affairs," he said, adding the "outer limit" for a decision was two weeks.
But The Hindu newspaper reported on its website late Friday, without naming sources, it had learned the panel favoured going ahead with the deal "at the same as evolving a mechanism to address" a bitter dispute over royalty payments.
In August 2010 London-listed Vedanta, owned by billionaire Anil Agarwal, said it would purchase a majority stake in Cairn India for $9.6 billion, adding to its assets that already include aluminium, copper, iron ore and zinc mines.
But the deal ran into problems because India wanted to set conditions before allowing Vedanta to assume control over Cairn India, whose biggest holding is the Mangala deposit in Rajasthan -- the country's largest onshore oil field.
Cairn and its Indian state-owned partner Oil and Natural Gas Corp (ONGC) are at odds over the payment of royalties on the Rajasthan oil production.
ONGC owns a 30 percent stake in the Cairn-operated Rajasthan block.
The government's latest announcement came two days after Cairn India reported a 10-fold leap in quarterly profit to a record 24.6 billion rupees ($543 million) thanks to a surge in crude oil prices and production.
Last week, Cairn and Vedanta extended their May 20 deadline for the deal without setting a new limit.
There was no immediate comment available from the two companies.
Source: AFP European Edition