Reliance floats subsidiary for refinery project

Reliance Petro to set up a 30 mn tpa refinery at a SEZ in Jamnagar.

Barely three years after merging Reliance Petroleum with itself, Reliance Industries has floated a subsidiary with the same name to set up an export-oriented refinery at Jamnagar in Gujarat.

Sources close to the development said Reliance Petroleum was setting up a 30-million-tonne-per-annum refinery at a special economic zone at Jamnagar.

The project is expected to start commercial production by the second half of 2008-09. The estimated cost of the project is $5.7 billion.

A Reliance Industries spokesperson declined to comment on these developments.

Interestingly, observers said, sales tax benefits along with the transfer pricing issue had played an important role in the company deciding to merge Reliance Petroleum with itself in 2002.

The biggest ever merger in India created the country's largest fully integrated energy firm with operations ranging from oil and gas and refining to oil marketing, power and textiles.

The sources also pointed out that environment clearance for the project had been obtained.

"UOP, Foster Wheeler and Exxon Mobil have been selected as technology licensers. Bechtel has been appointed as the engineering, procurement, construction and management contractor," they added.

But it is not known whether Reliance Industries wholly owns the new subsidiary. In a media statement on quarterly results on January 10, it said that Reliance Petroleum and Reliance Industrial Infrastructure became subsidiaries during the quarter.

Two days later, Reliance Industries informed the stock exchanges that it was now the new promoter of Reliance Industrial Infrastructure in place of Satyapal Jain. But it kept mum on Reliance Petroleum.