MUMBAI: Brookfield, the leading alternative investor with assets in more than 30 countries, has bought out the loss-making East West Pipeline Ltd (EWPL) for Rs13,000 crore from Mukesh Ambani.
“The Canadian company has already filed the preliminary placement memorandum, whereby India Infrastructure Trust, an InvIT set up by Brookfield as sponsor and 90 per cent per cent investor, will invest Rs13,000 crore to acquire the East West Pipeline,” a press statement said.
EWPL, the largest privately owned cross-country pipeline in India, and earlier known as Reliance gas Transportation Infrastructure Ltd, runs a 1,400-km pipeline from Kakinada in Andhra Pradesh to Bharuch in Gujarat to transport natural gas from a KG basin block operated Reliance Industries.
As a part of the transaction, the InvIT will acquire 100 per cent equity interest in Pipeline Infrastructure Private Ltd (PIPL), which currently owns and operates EWPL.
RIL will continue to be entitled to transport gas, either by itself or of any customers, free of cost against any outstanding unutilized capacity payments.
As per the conditions agreed, at the current approved final tariff of Rs 71.66/MMBTU, if the average volume of gas transported is 22 MMSCMD, RIL will not be liable to make unutilized capacity payments.
It has been agreed that the next review of tariff in April 2020 will also consider upward revision to tariff arising from determination of lower revised capacity of the pipeline.
Considering the new investments in the upstream sector in the KG basin, and the growing LNG imports, ability to swap gas, the average volume expected to be transported through the pipeline is expected to be significantly higher compared with the current levels.
RIL will be entitled to a significant participation in the net earnings of PIPL under the mechanism specified in the pipeline usage agreement. RIL’s current investment in preference shares valued at Rs 4,000 crore will continue and will be converted into equity at the end of 20 years.
Further at the end of 20 years, RIL has the right to acquire equity shares of PIPL held by the InvIT at an equity value of Rs 50 crore. .