Reliance Industries, led by Mukesh Ambani, to restructure and reallocate gasification assets
New Delhi: The board of directors of Reliance Industries Limited, headed by Mukesh Ambani, has decided to implement a scheme of arrangement (Scheme) to transfer the gasification business to a wholly owned subsidiary (WOS).
“The Jamnagar gasification project was set up with the aim of producing syngas to meet energy needs, because the exhaust gases from the refinery, which previously served as fuel, were reused as raw material for the refinery gas cracker (ROGC). This allows the production of olefins at competitive investment and operating costs. Synthesis gas as a fuel ensures reliability of supply and helps reduce volatility in energy costs. The syngas is also used to produce hydrogen for consumption at the Jamnagar refinery, ”the company said on Wednesday in a regulatory filing.
He added: “RIL aims to have a fully recyclable, sustainable and net zero carbon emissions portfolio. This will be achieved by switching to high-value materials and chemicals with renewable energies as a source of meeting its energy needs. As RIL gradually transitions to renewables as its primary energy source, more syngas will become available for upgrading to high value added chemicals, especially C1 chemicals and hydrogen. “
In addition, the carbon dioxide released during the hydrogen production process is highly concentrated and easy to capture, which significantly reduces the cost of carbon capture. Overall, these steps will help to significantly reduce the carbon footprint of the Jamnagar complex, ”he added.
The record further indicates that India is a high growth market and is expected to continue to experience a deficit of these high value chemicals for the foreseeable future. “The reallocation of gasification assets will help use syngas as a reliable source of feedstock to produce these chemicals and meet growing domestic demand, which will create an attractive business opportunity. Additionally, as the hydrogen economy grows, RIL will be well positioned to be the first engine to establish a hydrogen ecosystem, ”he said.
With the optionality in Syngas’ applications, the nature of the risk and returns associated with the assets of the gasifier will likely be distinct from those of the Company’s other activities. This distinct business profile also provides the opportunity to potentially attract a different group of investors and strategic partners for gasification assets and new materials and chemicals projects, RIL added.
The file further stated: “The Board accordingly approved a program to transfer the gasification business as an operating business on the basis of a discount sale for a lump sum consideration equal to the book value at the date of appointment “.
The program will also enable RIL to assess unlocking the value of syngas, with a collaborative and lightweight approach involving
(a) Induction of investor (s) in the gasification subsidiary and
(b) Seize the value of upgrading the RIL through partnerships in different
The date set for the Plan would be March 31, 2022 or any other date that may be determined by the Board. The program will require approval from stock exchanges, creditors, shareholders, the NCLT and other regulatory authorities.