RIL gains 3% on plans to hive-off gasification assets into separate unit

Shares of Reliance Industries (RIL) were up 3.4 per cent at Rs 2,431.80 on the BSE in Thursday’s intra-day trade after the company’s board decided to implement a scheme of arrangement to transfer gasification undertaking into a wholly-owned subsidiary (WOS). RIL made the announcements on Wednesday after market hours.

The board has approved a scheme as a going concern on slump sale basis for a lump sum consideration equal to the carrying value as on the appointed date i.e. March 31, 2022.

RIL said the Scheme will also enable the company to evaluate unlocking the value of syngas, with a collaborative and asset-light approach involving induction of investor(s) in the gasifier subsidiary and capturing value of upgradation in RIL through partnerships in different chemical streams, the company said.

On November 19, 2021, RIL had announced that the company and Saudi Aramco decided not to proceed with 20 per cent stake sale in RIL’s Oil to Chemical (O2C) hydrocarbon business. In the following three trading days, the stock price corrected by 5 per cent. It had hit a record high of Rs 2,750 on October 19, 2021.

Reliance recently unveiled its plans for the New Energy & Materials businesses by announcing the development of Dhirubhai Ambani Green Energy Giga Complex at Jamnagar, which accounts for a major part of the O2C assets. It will be amongst the largest integrated renewable energy manufacturing facilities in the world.

On November 24, RIL in media release said that 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, the company said.

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, RIL said.