Canadian company Brookfield Asset Management is all set to acquire Reliance Industries Limited (RIL) run East West Pipeline (EWPL) in a ₹13,000 crore deal. As part of transaction, India infrastructure Investment Trust (InvIT)- a trust sponsored and 90% invested by Brookfield would acquire 100% equity interest in the pipeline.
“Brookfield has filed the preliminary placement memorandum, in terms of which India Infrastructure Trust, an InvIT set up by Brookfield as a sponsor and 90 per cent investor, will invest Rs 13,000 crore to acquire the East-West Pipeline,” RIL stated.
Also, under the agreement the reserve capacity of the pipeline will be reduced to 33 MMSCMD (million metric standard cubic meter per day) from the current capacity of 56 MMSCMD.
As per the agreement, RIL would be entitled to a significant participation in the net earnings of PIPL. Apart from this, RIL will be entitled to acquire equity shares of Pipeline Infrastructure Private Ltd (PIPL), held by InvIT at an equity value of ₹50 crore, at the end of 20 years.
EWPL is a 1400 Km long pipeline connecting Kakinada located on Andhra coast to Bharuch (Gujarat). The pipeline has run into losses owing to drop in the natural oil production in Mukesh Ambani owned blocks in the Krishna-Godavari basin. Due to the drop in production the pipeline was just reportedly running on 5% of its overall capacity transporting just 80 mmscmd (million standard cubic meters a day) of natural gas.