Cairn faces fresh delay over sale of Indian arm

Published on Monday 14 February 2011 21:50

CAIRN Energy's £5.4 billion plan to sell a majority stake in its Indian oil business has hit further delays after the country's oil minister said the deal would be scrutinised by India's cabinet next month.

Jaipal Reddy said the views of the finance, law and corporate affairs ministries would be sought before the proposed sale goes to the Indian cabinet for approval, sparking fears the deal could blow past the 15 April deadline set by Cairn's chief executive Sir Bill Gammell.

"It (the proposal] is too big for one ministry to handle," said Reddy yesterday.

"We are trying to expedite the process."

Edinburgh-based Cairn agreed in August to sell a controlling stake in the Cairn India venture to Vedanta Resources, but government approval for the deal has already been delayed due to issues surrounding royalty payments.

Reddy's statement gives rise to fears that a decision on the deal could go well into April, as the cabinet is busy with the upcoming budget session of parliament as well as political firefighting amid a wave of damaging corruption scandals.

But analysts said the government would work to avoid undue delays.

A spokesman for Cairn Energy said: "Cairn continues to work with the Indian government to secure the necessary consents and approvals to complete the transaction by 15 April."