India gives nod to Cairn-Vedanta oil

India gave conditional clearance Thursday to the proposed multi-billion dollar sale of British oil explorer Cairn Energy's Indian oilfields to London-listed mining group Vedanta Resources. The sale, one of the biggest in Indian corporate history, was originally valued at 9.6 billion dollars, but Cairn and Vedanta agreed earlier this week to cut the price by 600 million dollars. Cairn agreed to sell a 40 percent stake in Cairn India to Vedanta nearly a year ago, but the had deal become bogged down in a dispute over royalties. "The cabinet gives conditional approval to the sale," Oil Minister Jaipal Reddy told reporters. The stipulated conditions are that Cairn or its successor agrees to bear a portion of the royalty payable on its mainstay Rajasthan oil fields and also accepts its liability to pay tax on the crude oil produced from the fields. India's state-run Oil and Natural Gas Corp (ONGC) owns a 30 percent stake in the Cairn-operated block but pays royalties on 100 percent of the output under a "royalty holiday" scheme dating from the 1990s aimed at promoting private oil exploration in energy-hungry India. "The royalty must be treated as cost recoverable," Reddy said.