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The CCEA has cleared the Cairn-Vedanta deal subject to all parties agreeing that royalty is cost
recoverable. Further, CIL would have to withdraw the ongoing arbitration on cess payments and
also the current CCEA decision can't be challenged
The CCEA (Cabinet Committee on Economic Affairs) has cleared the Cairn-Vedanta deal
subject to following conditions: 1) Royalty is cost recoverable. 2) Cairn India (CIL) would have
to withdraw the ongoing arbitration on cess payments. 3) No Objection Certificate (NOC) from
ONGC is required.
The Petroleum Minister clarified that all the concerned parties including CIL would have to
agree to the above conditions before GOI approval is given. Thus the CCEA decision on the
above can't be taken to arbitration.
Our current valuation for CIL of Rs360/share would drop to Rs295/share if we assume that
royalty payments are made cost recoverable, all other assumptions remaining unchanged.
This would be positive for ONGC. Our current valuation of ONGC (Rs325/share) includes
Rs5/share coming from the Rajasthan block assuming 15% project IRR. If royalty is made
cost recoverable, then the value of the block for ONGC would increase to Rs24/share and
ONGC's overall valuation would rise to Rs344/share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
The CCEA has cleared the Cairn-Vedanta deal subject to all parties agreeing that royalty is cost
recoverable. Further, CIL would have to withdraw the ongoing arbitration on cess payments and
also the current CCEA decision can't be challenged
The CCEA (Cabinet Committee on Economic Affairs) has cleared the Cairn-Vedanta deal
subject to following conditions: 1) Royalty is cost recoverable. 2) Cairn India (CIL) would have
to withdraw the ongoing arbitration on cess payments. 3) No Objection Certificate (NOC) from
ONGC is required.
The Petroleum Minister clarified that all the concerned parties including CIL would have to
agree to the above conditions before GOI approval is given. Thus the CCEA decision on the
above can't be taken to arbitration.
Our current valuation for CIL of Rs360/share would drop to Rs295/share if we assume that
royalty payments are made cost recoverable, all other assumptions remaining unchanged.
This would be positive for ONGC. Our current valuation of ONGC (Rs325/share) includes
Rs5/share coming from the Rajasthan block assuming 15% project IRR. If royalty is made
cost recoverable, then the value of the block for ONGC would increase to Rs24/share and
ONGC's overall valuation would rise to Rs344/share.
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