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RIL, Aramco deal delayed
FINANCE & INVESTMENT
RELIANCE Industries Ltd (RIL) has blamed current economic headwinds for delays to the planned sale of a 20% stake in its oil-to-chemi- cals (OTC) business to Saudi Aramco.
RIL, which operates the world’s largest down- stream complex in Jamnagar in Gujarat State, announced in August 2019 that state-owned Aramco had agreed to invest in its re ning, pet- rochemicals and fuels marketing businesses. e Middle Eastern oil giant was expected to pay $15bn for the stake.
RIL chairman Mukesh Ambani told share- holders on July 15, however, that “unforeseen circumstances in the energy market and the COVID-19 situation” meant the deal was no longer on track to meet the “original timeline”.
He did not provide any details of when or even if the deal, which was initially expected to be wrapped up by March, might go through.
e Indian conglomerate has some nancial manoeuvring room a er raising almost $30bn via external and internal share sales. Google, for example, bought a 7.7% stake in Reliance Jio on July 15 for $4.5bn. ese nancial deals have allowed the company to declare itself free of net debt.
Ambani said: “Our equity requirements have already been met. Nevertheless, we at Reliance value our over two-decade long relationship with Saudi Aramco and are committed to a long- term partnership.”
e chairman said RIL would seek regulatory permission to spin o its OTC business in order to facilitate the deal with Aramco, adding: “We expect to complete this process by early 2021.”
e chairman said other international com- panies had approached RIL to partner in the petrochemical space. He added: “ ese poten- tial partnerships will help us build competitive manufacturing capacity at our existing sites to serve the de cit Indian market that still depends on large-scale imports of chemicals.”
Reuters quoted four unnamed sources famil- iar with the deal as saying that the two sides had failed to agree on a price for the stake. Aramco is understood to be pushing for a price review, given this year’s oil price crash and the likeli- hood that international oil prices will remain depressed for a number of years.™
Bangladesh LNG power project secures Japanese loans
FINANCE & INVESTMENT
JAPANESE companies intend to loan JPY69bn ($644mn) to a new lique ed natural gas (LNG) red power project in Bangladesh.
The 750-MW thermal power plant (TPP) will be located 40 km from Dhaka City and is slated to come online in 2022. e plant will sell its electricity to state-owned Bangladesh Power Development Board (BPDB) under a 22-year contract.
Japan’s largest LNG trader, JERA, bought a 49% stake in the project from India’s Reliance Power last year. Reliance owns the remaining 51% of the project.
Japan Bank for International Coopera- tion (JBIC) will be responsible for JPY28.5bn
($265.9mn) of the project loan. The Asian Development Bank (ADB) and Japanese banks Mizuho Bank, Sumitomo Mitsui Banking and MUFG Bank will also provide credit. Japan’s public sector Nippon Export and Investment Insurance will guarantee private-sector loans as well as JERA’s stake in the project.
e South Asian country is a major gas pro- ducer, extracting 28.7bn cubic metres in 2019, according to BP’s Statistical Review of World Energy. is was an 8% increase from the 26.6 bcm produced in 2018. However, the country began struggling with shortages several years ago as a result of soaring residential and power sector demand. These shortages have led to
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w w w . N E W S B A S E . c o m Week 28 16•July•2020