Reliance jumpstarts $12bn petchem capex plan

Reliance Industries is reaching for the stars. In the next three-four years, it wants to have the capability of earning in five years what it has earned over the last 30 years which explains the USD 12 billion capex plan it has kick started for its petchem business, reports CNBC-TV18’s Sajeet Manghat.

RIL has kick started the massive USD 12 billion dollar petchem capex plan Mukesh Ambani first mooted at the company's AGM two-years ago.
Spread over the next three-four years at the Jamnagar petchem complex, it begins with the selection of technology for the USD 4 billion petcoke gasification project.
For one, this will direct the 6 million tonne of petcoke produced internally each year towards gasification.
In addition, the gas produced after capex will be used as feedstock for a new chemical complex, fuel the refinery's existing gas turbine power generation units and provide feedstock for future chemicals production.
Once complete, the gasification project is also expected to enhance gross refinery margins by USD 3 per barrel.
The capex plan also involves building a one million tonne acetic acid manufacturing facility at Jamnagar which will also lead to further investment in several value-added products in RIL's acetyl portfolio.
Reliance expects this move from commodities to specialties to provide, in just the next five years, what it has earned over the last 30 years from its petchem business.
At the end of March this year, Reliance already had cash and cash equivalents of Rs 70,252 crore, that's USD 13.8 billion.
But that's not stopping it from trying to avail cheap financing from the global markets.
In typical Reliance style, the Jamnagar expansion project is the largest underwriting undertaken by global insurance giant Euler Hermes and this gives Reliance a better credit rating than India's sovereign rating and comes with a 13-year tenure. 
That's not all. Reliance is also talking to other global financial institutions to piggy-back better global credit ratings for suppliers and underwriters to finance its Jamnagar operations. It is also in the process of cornering additional financing to the tune of USD 1 billion from Korean banks.