Reliance to transfer gasification undertaking into a subsidiary
Gas

Reliance to transfer gasification undertaking into a subsidiary

The scheme will also enable RIL to evaluate unlocking the value of syngas, with a collaborative and asset-light approach

  • By ICN Group | November 25, 2021

Reliance Industries Limited (RIL) has decided to implement a Scheme of Arrangement (Scheme) to transfer Gasification Undertaking into a wholly-owned subsidiary (WOS).

The Gasification project at Jamnagar was set up with the objective to produce syngas to meet the energy requirements as refinery off-gases, which earlier served as fuel, were repurposed into feedstock for the Refinery Off Gas Cracker (ROGC). This enables production of olefins at competitive capital and operating costs.

Syngas as a fuel ensures reliability of supply and helps reduce volatility in the energy costs. Syngas is also used to produce Hydrogen for consumption in the Jamnagar refinery.

RIL targets to have a portfolio which is fully recyclable, sustainable and net carbon zero. This will be achieved by transitioning to high value materials and chemicals with renewables as the source of meeting its energy requirements. As RIL progressively transitions to renewables as its primary source of energy, more syngas will become available for upgradation to high value chemicals including C1 chemicals and hydrogen.

Further, carbon dioxide released during the process of producing hydrogen is highly concentrated and easy to capture, substantially reducing the cost of carbon capture. Overall, these steps will help sharply reduce the carbon footprint of the Jamnagar complex.

With optionality in applications for Syngas, the nature of risk and returns associated with the gasifier assets will likely be distinct from those of the other businesses of the company. This distinct business profile also provides the opportunity to potentially attract a different pool of investors and strategic partners for the gasification assets and new materials and chemicals projects.

The board has accordingly approved a scheme to transfer the gasification undertaking as a going concern on slump sale basis for a lump sum consideration equal to the carrying value as on the appointed date.

The scheme will also enable RIL to evaluate unlocking the value of syngas, with a collaborative and asset-light approach involving: Induction of investors in the gasifier subsidiary; and capturing value of upgradation in RIL through partnerships in different chemical streams.

The appointed date of the Scheme would be March 31, 2022 or such other date as may be determined by the Board. The scheme will require approval of stock exchanges, creditors, shareholders, NCLT, and other regulatory authorities.

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