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 Reliance Industries Ltd's Board on Wednesday decided to implement a 'Scheme of Arrangement' to transfer the 'Gasification' undertaking into a wholly-owned subsidiary (WOS).

"RIL targets to have a portfolio which is fully re-cyclable, sustainable and net carbon zero. This will be achieved by transitioning to high value materials and chemicals with renewables as the source of meeting its energy requirements," the company said in a statement.

"As RIL progressively transitions to renewables as its primary source of energy, more 'syngas' will become available for upgradation to high value chemicals including 'C1 chemicals and hydrogen'."

Further, the company said that the carbon dioxide released during the process of producing 'Hydrogen' is highly concentrated and easy to capture, substantially reducing the cost of carbon capture.

"Overall, these steps will help sharply reduce carbon footprint of Jamnagar complex."

"India is a high growth market and is expected to continue to see a deficit of these high value chemicals in the foreseeable future."

According to RIL, repurposing the 'Gasification' assets will help use 'syngas' as a reliable source of feedstock to produce these chemicals and cater to growing domestic demand, resulting in an attractive business opportunity.

"Further, as the hydrogen economy expands, RIL will be well positioned to be the first mover to establish a hydrogen ecosystem."

Furthermore, with optionality in applications for 'Syngas', the nature of risk and returns associated with the gasifier assets will likely be distinct from those of the other businesses of the company.

"This distinct business profile also provides the opportunity to potentially attract a different pool of investors and strategic partners for the gasification assets and new materials and chemicals projects."

"The Board has accordingly approved a Scheme to transfer the 'Gasification Undertaking' as a going concern on slump sale basis for a lump sum consideration equal to the carrying value as on the 'Appointed Date'."

Additionally, the scheme will enable RIL "to evaluate unlocking the value of syngas, with a collaborative and asset-light approach involving - induction of investor(s) in the gasifier subsidiary and - capturing value of upgradation in RIL through partnerships in different chemical streams".

The appointed date of the scheme would be March 31, 2022 or "such other date as may be determined by the Board", the company said.

In addition, the scheme will require approval of Stock Exchanges, Creditors, Shareholders, NCLT and other regulatory authorities.

The 'Gasification' project at Jamnagar was set up with the objective to produce syngas to meet the energy requirements as refinery off-gases, which earlier served as fuel, were repurposed into feedstock for the 'Refinery Off Gas Cracker' (ROGC).

This enables production of 'olefins' at competitive capital and operating costs.

Besides, 'Syngas' as a fuel ensures reliability of supply and helps reduce volatility in the energy costs.

The 'Syngas' is also used to produce Hydrogen for consumption in the Jamnagar refinery.