Reliance to conclude Aramco deal this year; Aramco rep on co board
Mukesh Ambani told shareholders that RIL is expected to sell 20 per cent stake in its oil-to-chemical unit to Saudi Aramco
Mumbai: Saudi Aramco chairman and head of the Kingdom’s cash-rich wealth fund PIF Yasir Othman Al-Rumayyan will join the board of Reliance Industries Ltd as a precursor to a $15 billion deal that is now expected to conclude this year.
RIL chairman and Asia’s richest man Mukesh Ambani told shareholders that a deal to sell a 20 per cent stake in the company’s oil-to-chemical unit to Saudi Aramco was expected to conclude this year. Harvard educated Al-Rumayyan, 51, will replace Yogendra P Trivedi, 92, who has expressed a desire to retire, Ambani said.
“Despite several challenges due to COVID-19, we have made substantial progress in the past in our discussions (with Saudi Aramco),” he said. “I expect our partnership to be formalised in an expeditious manner during this year.” RIL had inked an initial pact to sell a fifth of the unit that houses its oil refineries, petrochemical plants and fuel retailing business in August 2019, but the outbreak of global pandemic delayed the deal.
In 2019, he had announced a $75 billion valuation for the O2C business. On Thursday, he did not put any value. He, however, announced the appointment of Al-Rumayyan, Chairman of Saudi Aramco and the Governor of the Public Investment Fund (PIF), as an independent director on the RIL board. Besides bringing his vast financial experience, the induction of Al-Rumayyan, who also sits on the board of SoftBank Group Corp and Uber Technologies, will bring down the average age of the board of directors of Reliance.
Over the past years, the oil-to-telecom conglomerate has segregated businesses into separate verticals – Jio Platforms houses the company’s digital and telecom unit, retail is a separate unit, and oil refining and petrochemical segments have been carved into the O2C vertical to attract strategic partnerships.
“I am sure that we will immensely benefit from his rich experience of running one of the world’s largest companies, and also one of the largest sovereign wealth funds in the world,” Ambani said. “His joining our board is also the beginning of the internationalisation of Reliance. You will hear more about our international plans in the times to come.” An accounting graduate from King Faisal University, Saudi Arabia who went on to do a general management programme at Harvard Business School, Al-Rumayyan is the head of PIF since May 2019. He was appointed chairman of the board of Saudi Aramco in September 2019.
With a stake, Aramco would not just have a share in one of the world’s best refineries and the largest integrated petrochemical complex, but also access to one of the fastest-growing markets — a ready-made market for 5 lakh barrels per day of its Arabian crude and a potentially bigger downstream role in future.
While COVID-19 delayed the deal, talks have revived this year and the two are reportedly discussing a cash and share deal – Aramco paying for the stake with its shares initially and then staggered cash payments over several years. Besides refineries and petrochemical plants, the O2C business also comprises a 51 per cent stake in the fuel retailing business. It, however, does not include the upstream oil and gas producing assets such as the flagging KG-D6 block in the Bay of Bengal.
RIL board has Ambani and his wife Nita, cousins Hital and Nikhil Meswani. Business heads PMS Prasad and PK Kapil too are on the board.
Clean energy
Mukesh Ambani on Thursday announced a Rs 75,000 crore investment in setting up four ‘Giga’ factories to make solar photovoltaic cells, green hydrogen, batteries and fuel cells over the next three years. Addressing the company’s annual shareholder meeting, he said Reliance will set up 100 GW of solar power generating capacity.
“We plan to build four Giga Factories to manufacture and integrate all critical components of new energy ecosystem – solar photovoltaic module factory, energy storage battery factory, electrolyser factory, fuel cell factory,” Ambani said.
These four factories will involve an investment of Rs 60,000 crore. “We will invest an additional Rs 15,000 crore in the value chain, partnerships and future technologies, including upstream and downstream industries. Thus, our overall investment in the new energy business will be Rs 75,000 crore in 3 years,” he said.
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