Brookfield buys gas pipeline from Mukesh Ambani for ₹13,000 crore

Canadian investor Brookfield has acquired the loss-making East West Pipeline Ltd from Mukesh Ambani for ₹13,000 crore.

East West Pipeline (EWPL), 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 discovered in a KG basin block operated by his flagship firm Reliance Industries.

However, the pipeline that had a capacity to transport 80 million standard cubic metres per day of natural gas is currently operating at less than 5 per cent of its capacity as output from the KG-D6 block of RIL plummeted rapidly.

India Infrastructure Trust, an InvIT set up by Brookfield as sponsor and 90 per cent investor, will invest ₹13,000 crore to acquire the pipeline. As part of the transaction, the InvIT will acquire 100 per cent equity interest in Pipeline Infrastructure Private Ltd, which currently owns and operates the pipeline.

Post acquisition by Brookfield, the existing pipeline usage agreement has been reworked by reducing the reserved capacity to 33 mmscmd from the 56 mmscmd. Any unutilised capacity payment by RIL will be the difference between ₹500 crore a quarter and actual revenue earned by PIPL.

RIL will continue to be entitled to transport gas, either by itself or of any customers, free of cost against any outstanding unutilised capacity payments.

At the current approved final tariff of ₹71.66/MMBTU, if the average volume of gas transported is 22 mmscmd, RIL will not be liable to make unutilised capacity payments.

RIL’s current investment in preference shares valued at ₹ 4,000 crore will continue and would be converted into equity at the end of 20 years.

At the end of 20 years, RIL also has the right to acquire equity shares of PIPL held by the InvIT at an equity value of ₹50 crore.

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