Restructuring of gasification assets to unlock value for RIL
The restructuring of gasification assets will unlock value, provide flexibility for Reliance Industries Limited (RIL).
image for illustrative purpose
New Delhi, Feb 12 The restructuring of gasification assets will unlock value, provide flexibility for Reliance Industries Limited (RIL).
Gasification Undertaking is proposed to be transferred, as a going concern on Slump Sale basis, by way of a Scheme of Arrangement.
The Appointed Date for the Scheme is March 31, 2022 or such other date as may be approved by the Board. The Scheme has been filed with both Mumbai and Ahmedabad NCLTs and will require approvals of Shareholders, Creditors and NCLT.
RIL said this in a presentation for Equity Shareholders and Creditors in relation to the Scheme of Arrangement between Reliance Industries Limited (RIL) & its shareholders and creditors and Reliance Syngas Limited (wholly owned subsidiary of RIL) & its shareholders and creditors.
Gasification assets are proposed to be transferred to a subsidiary which will provide flexibility to induct suitable strategic partners and distinct sets of investors, RIL said in a presentation.
Collaborative and asset-light approach to unlock value of syngas, specifically induction of investors in gasifier subsidiary and capturing value of upgradation in RIL through partnerships and investments in different chemical streams.
With downstream optionality for Syngas, the nature of risk and returns associated with the gasifier assets will likely become distinct from those of other businesses of the Company.
Syngas has potential to produce H2 at a competitive cost of $1.2-1.5 / kg 2. With CCUS, RIL can be one of the largest producers of blue hydrogen globally.
In the interim, till cost of green hydrogen comes down, RIL can be the first mover to establish a hydrogen ecosystem, with minimal incremental investment, in India.
Subsequently, as hydrogen from syngas is replaced by green hydrogen, the entire syngas will be converted to chemicals.
Jamnagar energy demand is currently met through fossil fuels including syngas from the gasifiers. Fossil fuel can be replaced by renewables, including solar, biomass-based fuel, H2 and changing steam drives to electric drives. Jamnagar will progressively transition to renewables with battery energy storage system (BESS) to meet its electricity and steam demand. Hydrogen demand will be met by green hydrogen produced through water electrolysis.
RIL has set an ambitious target to achieve Net Carbon Zero by 2035. Framework for reducing carbon footprint include migration from fossil energy to renewables, maximizing sustainable materials and chemicals as part of portfolio, carbon fixation, capture and utilisation.
RIL said transition to Net Carbon Zero provides unique opportunity to unlock value through repurposing of assets and upgradation of configuration.
New chemicals subsidiary of RIL to focus on value addition to syngas. JV approach to attract technology/licensor partners for individual chemical streams and a balance-sheet light approach to de-risk investments.
