ID :
131093
Sat, 07/03/2010 - 08:19
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Shortlink :
https://oananews.org//node/131093
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Anil Ambani group firms RNRL and Reliance Power to merge
New Delhi, July 2 (PTI) With much of its relevance lost
as a business entity after the signing of a gas supply deal
with Mukesh Ambani led Reliance Industries Limited, Anil
Ambani group firm RNRL will merge with sister concern Reliance
Power. Market worth of the combined entity at Friday's price
would be Rs 50,000 crore.
The merger, possibly through a share swap deal, would be
considered by the boards of the two companies on July 4.
Rumours of the deal pulled down the share prices of both
Reliance Natural Resources Limited and Reliance Power at the
close of the trading on bourses.
Spokespersons of the group firms remained tightlipped
about the rationale and modalities of merger, which would
create an entity whose market cap would still be less than
half of the initial market value of Reliance Power alone.
On the first day of its listing on February 11, 2008,
R-Power had seen its market cap soaring to Rs 1,23,000 crore,
albeit for a brief while, and later the stock had slipped way
below the issue price of Rs 450 a share.
As a damage minimisation, the promoters had issued bonus
shares to salvage the share price, which is still less than
half at nearly Rs 175 as of Friday.
On its first day on bourses, post the country's biggest
ever IPO of Rs 11,500 crore that is still the only IPO that
Anil Ambani's group came out with ever since he split from
elder brother Mukesh in June 2005, R-Power figured among the
top 10 valued firms, but currently ranks 30th.
On the other end, RNRL was born out of the demerger of
Dhriubhai Ambani's Reliance empire five year ago. The purpose
of creation of RNRL was for sourcing, supply and transporation
of fuels, primarily natural gas.
As per the demerger scheme, RNRL was to source natural
gas from Reliance Industries and trade it to ADAG power plants
including the proposed mega 7,800-MW Dadri unit near here
being set up by R-Power.
However, with the Supreme Court of India on May 7
upholding the government policy on pricing and utilisation of
natural gas, RNRL almost had no role left in supply of gas to
R-Power.
According to government's Gas Utilisation Policy, trading
or profiteering from natural gas sales is not allowed -- no
company can buy the fuel from a producer and sell it to an end
consumer like a power firm for a margin.
Suppliers like RIL can only enter into a Gas Sales and
Purchase Agreement (GSPA) with an actual user of gas.
Though it had signed a Gas Sales Master Agreement (GSMA)
with RNRL expressing its intent to supply natural gas from
eastern offshore KG-D6 fields, RIL can enter into a GSPA only
with R-Power which is to implement the Dadri or other power
plants of ADAG.
The apex court had on May 7 rejected RNRL's plea for
gas from RIL at rates arrived in a private family agreement,
saying the government alone had the right to approve the price
of fuel and fix its user.
The apex court said RIL can sell gas to RNRL at
government-set prices of USD 4.2 per million British thermal
unit and asked the two to enter into fresh agreement.
The new GSMA, entered into last week, was to replace the
four-year-old GSMA between RIL and RNRL for supply of a
minimum 28 million cubic metres per day of natural gas at USD
2.34 per mmBtu.
While RIL and RNRL have refused to share details of the
new GSMA, sources in know of the development say the new
contract does not mention the volume, tenure or price of gas,
but only lists the requirement of gas at ADAG's proposed
units, including the 7,800-MW Dadri plant near here and the
Shahapur plant in Maharashtra in west India.
Supplies may have also been sought for expansion of the
220-MW Samalkot plant in Andhra Pradesh, the 48-MW Goa project
and the 165-MW Kochi plant.
Once gas allocation is approved by an Empowered Group of
Ministers headed by Indian Finance Minister Pranab Mukherjee,
RIL will enter into GSPA with R-Power for the specific plants
of at the price and tenure determined by the government.
ADAG plants may be at least 27-30 months away from taking
first gas.
RPower has separately bagged three coal-fired Ultra Mega
Power Projects of 4,000 MW each. PTI ANZ
as a business entity after the signing of a gas supply deal
with Mukesh Ambani led Reliance Industries Limited, Anil
Ambani group firm RNRL will merge with sister concern Reliance
Power. Market worth of the combined entity at Friday's price
would be Rs 50,000 crore.
The merger, possibly through a share swap deal, would be
considered by the boards of the two companies on July 4.
Rumours of the deal pulled down the share prices of both
Reliance Natural Resources Limited and Reliance Power at the
close of the trading on bourses.
Spokespersons of the group firms remained tightlipped
about the rationale and modalities of merger, which would
create an entity whose market cap would still be less than
half of the initial market value of Reliance Power alone.
On the first day of its listing on February 11, 2008,
R-Power had seen its market cap soaring to Rs 1,23,000 crore,
albeit for a brief while, and later the stock had slipped way
below the issue price of Rs 450 a share.
As a damage minimisation, the promoters had issued bonus
shares to salvage the share price, which is still less than
half at nearly Rs 175 as of Friday.
On its first day on bourses, post the country's biggest
ever IPO of Rs 11,500 crore that is still the only IPO that
Anil Ambani's group came out with ever since he split from
elder brother Mukesh in June 2005, R-Power figured among the
top 10 valued firms, but currently ranks 30th.
On the other end, RNRL was born out of the demerger of
Dhriubhai Ambani's Reliance empire five year ago. The purpose
of creation of RNRL was for sourcing, supply and transporation
of fuels, primarily natural gas.
As per the demerger scheme, RNRL was to source natural
gas from Reliance Industries and trade it to ADAG power plants
including the proposed mega 7,800-MW Dadri unit near here
being set up by R-Power.
However, with the Supreme Court of India on May 7
upholding the government policy on pricing and utilisation of
natural gas, RNRL almost had no role left in supply of gas to
R-Power.
According to government's Gas Utilisation Policy, trading
or profiteering from natural gas sales is not allowed -- no
company can buy the fuel from a producer and sell it to an end
consumer like a power firm for a margin.
Suppliers like RIL can only enter into a Gas Sales and
Purchase Agreement (GSPA) with an actual user of gas.
Though it had signed a Gas Sales Master Agreement (GSMA)
with RNRL expressing its intent to supply natural gas from
eastern offshore KG-D6 fields, RIL can enter into a GSPA only
with R-Power which is to implement the Dadri or other power
plants of ADAG.
The apex court had on May 7 rejected RNRL's plea for
gas from RIL at rates arrived in a private family agreement,
saying the government alone had the right to approve the price
of fuel and fix its user.
The apex court said RIL can sell gas to RNRL at
government-set prices of USD 4.2 per million British thermal
unit and asked the two to enter into fresh agreement.
The new GSMA, entered into last week, was to replace the
four-year-old GSMA between RIL and RNRL for supply of a
minimum 28 million cubic metres per day of natural gas at USD
2.34 per mmBtu.
While RIL and RNRL have refused to share details of the
new GSMA, sources in know of the development say the new
contract does not mention the volume, tenure or price of gas,
but only lists the requirement of gas at ADAG's proposed
units, including the 7,800-MW Dadri plant near here and the
Shahapur plant in Maharashtra in west India.
Supplies may have also been sought for expansion of the
220-MW Samalkot plant in Andhra Pradesh, the 48-MW Goa project
and the 165-MW Kochi plant.
Once gas allocation is approved by an Empowered Group of
Ministers headed by Indian Finance Minister Pranab Mukherjee,
RIL will enter into GSPA with R-Power for the specific plants
of at the price and tenure determined by the government.
ADAG plants may be at least 27-30 months away from taking
first gas.
RPower has separately bagged three coal-fired Ultra Mega
Power Projects of 4,000 MW each. PTI ANZ
