The ministry of finance has agreed to reassess the request done by ONGC for refunding the royalty that the firm is paying to the government of Rajasthan on Cairn India’s behalf. Cairn is ONGC’s partner in the productive oilfield of Barmer, located in Rajasthan

Analysts think that the government is willing to solve the royalty issue internally as it wants to help ONGC for tackling the legal hassles in making Vedanta dole out the cash for royalty as Vedanta, from purchasing Cairn India, might get the participating interest from its Barmer oilfield. Actually Vedanta-Cairn deal can witness a smooth closure from the step.

Cairn Energy was dissuaded from completing its deal of selling majority of its stakes of its Indian firm to Vedanta Resources of UK because of the worries of ONGC over the royalty yoke.

Ashok Chawla, the finance secretary, while talking to FE had indicated that government had changed its stance, and stated that the said matter had presented itself to them, many times in the past, but the govt didn’t agree as ONGC was ready to make the payment and if ONGC feels the government has to help then they have to come up with the proposal.

As the finance ministry didn’t like the idea of a commercial enterprise to come within the government’s budget though it is a state-owned one, they, in the past had rejected the proposal.

At present, the government possibly will find means and ways to help ONGC so that the proposed sales of its majority stakes by Cairn India worth nine decimal six billion dollars to the UK based Vedanta Resources can take place.

Chawla stated that as the matter has come into their lap now they will look into it.

ONGC has just one third of participating interest in Barmer, run by Cairn, but it had to take the burden of paying the royalty for its partner because the government wanted to procure foreign technology and investment in the oil sector.