Vedanta Demerger Could Hamper Recoveries: Govt

Govt flags foreign loans against national assets, $578 mn in dues among multiple objections

- Nehal Chaliawala

The ministry of petroleum and natural gas has raised over a dozen objections to the proposed demerger of Vedanta Ltd into five listed companies, saying it could hamper the recovery of dues to the government.

The objections include concerns over the company raising foreign loans by offering national oil assets as collateral, said a person directly aware of the government's case.

The ministry also objected to Vedanta withholding $578 million in payments to the government as part of the production-sharing agreement for India's largest onshore crude oil block in Rajasthan, which is operated by Vedanta subsidiary Cairn Oil & Gas.

Vedanta had announced its plan to demerge into six separately listed entities back in September 2023, aiming to complete the process by March 2025. On Wednesday, the National Company Law Tribunal asked Vedanta to respond within four weeks after the petroleum ministry objected to the proposed demerger, which could be delayed beyond September 2025 due to pending regulatory approvals—particularly from the tribunal.

The ministry's other concerns include the liquidity position of Malco Energy, which has revenue- and production-sharing agreements for oil and natural gas with the Indian government. Malco is set to become a part of Vedanta Oil & Gas after the demerger.