RIL rallies 6% as firm to restructure, repurpose gasification assets

New Delhi: Reliance Industries' shares rose 6% in Thursday's mid-day trade after it said it would hive off its gasifier unit and induct investors in it.

“While investors have been skeptical about returns on the petcoke gasifier business for the past five years, the environment of high global gas prices, gasifier's ability to produce hydrogen which can be converted into blue hydrogen (using carbon capture) and gasifier output of syngas (valuable in producing higher value add chemicals) – all now make it a highly profitable investment after multiple years of challenges,” Morgan Stanley said in a note on Thursday.

The board of , last Wednesday, approved a scheme to transfer the gasification undertaking at Jamnagar as a going concern on a slump sale basis, the company said in a statement. The appointed date of the scheme would be March 31, 2022.

“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.

The company targets to have a portfolio that 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,” the company said. “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.”

Repurposing the gasification assets will help use syngas as a reliable source of feedstock to produce high-value chemicals and cater to growing domestic demand, resulting in an attractive business opportunity, the company said.