Mumbai,: The Board (“the Board”) of Reliance Industries Limited (“the
Company” or “RIL”) has today 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 re-cyclable, 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, carbondi-oxide 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 carbon footprint of Jamnagar complex.
India is a high growth market and is expected to continue to see a deficit of these high value
chemicals in the foreseeable future. Repurposing the Gasification assets will help use
syngas as a reliable source of feedstock to produce these chemicals and cater to growing
domestic demand, resulting in an attractive business opportunity. Further, as the hydrogen
economy expands, RIL will be well positioned to be the first mover to establish a hydrogen
ecosystem.
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 (a) Induction of investor(s) in the gasifier
subsidiary and (b) 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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