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Posted at: Aug 13, 2019, 7:50 AM; last updated: Aug 13, 2019, 8:05 AM (IST)

RIL to be zero-debt firm in 18 months

To sell stakes for Rs 1.15 lakh cr to Saudi Aramco, BP
RIL to be zero-debt firm in 18 months
RIL chief Mukesh Ambani and his wife Nita Ambani in Mumbai on Monday. PTI

Mumbai, August 12

Richest Indian Mukesh Ambani today announced plans to sell stakes in his flagship Reliance Industries’ oil and chemical business to Saudi oil giant Aramco and in fuel retail network to BP plc of UK for a combined Rs 1.15 lakh crore as he looked to make his company a zero-net debt firm in 18 months. He was speaking at the company’s 42th annual general meeting (AGM) here.

Ambani said Saudi Aramco will buy 20% stake in Reliance’s oil and chemicals business at an enterprise value of $75 billion while BP will pick up 49% in the company’s network of petrol pumps and aviation fuel facilities.

The Saudi investment is “the biggest foreign investment in the history of Reliance,” he said. “It is also among the largest foreign investments in India.” BP had previously bought a 30% stake in 21 oil and gas blocks of Reliance for $7.2 billion in 2011.

The deal with Aramco covers all of Reliance’s refining and petrochemicals assets as well as the remainder of stake the firm has in fuel retailing business after selling 49% to BP, he said.

Aramco, the world’s biggest crude exporter, will also supply Reliance’s twin-refineries at Jamnagar in Gujarat with 5,00,000 barrels of oil a day on a long-term basis, Ambani said.

The deal is subject to due diligence, definitive agreements, and regulatory and other approvals, he said.

Ambani said BP will pay about Rs 7,000 crore for acquiring a 49% stake in Reliance’s fuel retailing network.

Last week, the two firms had announced a new joint venture to set up petrol pumps and retail aviation turbine fuel to airlines in India.

Reliance’s existing 1,400-odd petrol pumps, as well as 31 aviation fuel stations, will be transferred to the new joint venture where BP will hold 49 per cent equity stake. Reliance will hold the balance 51% in the entity, which aims to expand the retail network to 5,500 petrol pumps in the next five years, the two firms had said.

“In a significant new initiative, BP acquired a 49% stake in our Petro-retail business. Reliance will get Rs 7,000 crore from BP for this transaction,” Ambani said at the AGM.

The twin deals will help cut some of the Rs 2,88,243 crore group debt as on June 30, 2019. The debt, however, stood at Rs 1,54,478 crore after accounting for monetisation of telecom infrastructure such as towers.

“We have a very clear roadmap to becoming a zero-net debt company within the next 18 months, that is by March 31, 2021,” he said. “We expect to complete transactions with Saudi Aramco and BP within this financial year. These are expected to generate an inflow of Rs 1.15 lakh crore.” Also, Reliance has received “strong interest” from strategic and financial investors for its consumer businesses — telecom venture Jio and Reliance Retail, he said without giving details. — PTI

Deal dynamics

  • Saudi Aramco will buy 20% stake in Reliance’s oil and chemicals business at an enterprise value of $75 billion while BP will pick up 49% in the company’s network of petrol pumps and aviation fuel facilities
  • The Saudi investment is the biggest foreign investment in the history of Reliance, Ambani said
  • Aramco will also supply Reliance’s twin-refineries at Jamnagar in Gujarat 5,00,000 barrels of oil a day on a long-term basis

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