India Fin min: ONGC Row Should Not Spoil Cairn Deal-Paper.

NEW DELHI, March 21 (Reuters) - India's finance ministry has said the government should not arm-twist Cairn Energy by linking the approval for its deal with Vedanta to disputes between the British explorer and state-run Oil and Natural Gas Corp, the Economic Times reported.

The newspaper cited a finance ministry letter dated March 16 saying ONGC's problems should not be linked to the deal, which involves a sale of shares.

"Since there is a dispute between the parties regarding the interpretation of the provisions of the contract, the government of India cannot be seen using this opportunity to settle pending disputes in its own favour," the paper cited a finance ministry note as saying.

Cairn agreed in August to sell a controlling stake in Cairn India to Vedanta for up to $9.6 billion, setting a target date of April 15 to seal the transaction, but the deal has been delayed as issues around royalty payments need to be resolved.

ONGC owns a 30 percent stake in some of the assets up for sale but pays 100 percent of the royalties. India's oil ministry says the government will protect ONGC's interests.

Source : af.reuters.com