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Home News Power Sector News RNRL, RPower boards mull merger today

RNRL, RPower boards mull merger today

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ADAGWith Reliance Natural Resources Ltd losing much of the relevance it was originally created for -- sourcing and supply of fuels, its board will today consider merging itself with the sister concern Reliance Power. The boards of both RNRL as well as Reliance Power will meet tomorrow to consider the merger, which will create a new entity with a combined market worth of Rs 50,000 crore. The merger could possibly be through a share swap deal.

Spokespersons of the group firms remained tightlipped about the rationale and modalities of the 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 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.

RNRL was born out of the demerger of Dhirubhai 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 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 the 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.

Source- PTI

 

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