Restructuring of gasification assets to unlock value for Reliance

The restructuring of the gasification assets will unlock value and provide flexibility to Reliance Industries Limited (RIL).

It is proposed to transfer the gasification business, as a going concern on a crisis sale basis, by way of a plan of arrangement.

The appointment date for the plan is March 31, 2022 or such other date as may be approved by the Board. The plan has been filed with the Mumbai and Ahmedabad NCLTs and will require approval from shareholders, creditors and the NCLT.

RIL said this in a presentation for shareholders and creditors regarding the plan of arrangement between Reliance Industries Limited (RIL) and its shareholders and creditors and Reliance Syngas Limited (a wholly owned subsidiary of RIL) and its shareholders and creditors.

It is proposed to transfer the gasification assets to a subsidiary which will provide the flexibility to bring in suitable strategic partners and separate sets of investors, RIL said in a presentation.

Collaborative and lean approach to unlocking the value of syngas, in particular the induction of investors in a gasifier subsidiary and the valuation of the upgrade in RIL through partnerships and investments in different chemical streams.

With the downstream option for syngas, the nature of the risk and returns associated with the gasification assets will likely become distinct from those of the Company’s other businesses.

Syngas has the potential to produce H2 at a competitive cost of $1.2-1.5/kg2. With CCUS, RIL can be one of the largest producers of blue hydrogen in the world.

In the meantime, until the cost of green hydrogen drops, RIL can be the first to establish a hydrogen ecosystem, with minimal additional investment, in India.

Subsequently, as the hydrogen in the syngas is replaced with green hydrogen, all of the syngas will be converted into chemicals.

Jamnagar’s energy demand is currently met by fossil fuels, including syngas from gasifiers. Fossil fuels can be replaced by renewable energies, including solar power, biomass fuels, H2 and the switch from steam engines to electric motors. Jamnagar will gradually switch to renewable energy with a Battery Energy Storage System (BESS) to meet its electricity and steam demand. Hydrogen demand will be met by green hydrogen produced by electrolysis of water.

RIL has set an ambitious goal to achieve Net Carbon Zero by 2035. The carbon footprint reduction framework includes migrating from fossil fuels to renewables, maximizing sustainable materials and chemicals as part of the portfolio, sequestration, capture and use of carbon.

RIL said the transition to Net Carbon Zero offers a unique opportunity to unlock value through asset repurposing and configuration upgrading.

New chemical subsidiary of RIL to focus on adding value to syngas. Joint venture approach to attract technology partners/licensors for individual chemical streams and a lean balance sheet approach to reduce investment risk.



(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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