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Fitch Ratings has revised Reliance Industries' (RIL) national long-term local currency rating to positive from stable. The local currency rating revision reflects the likelihood of RIL's credit metrics strengthening further, subject to the closure of its proposed deal with BP Plc and no major investment being announced, Fitch said in a press release on Tuesday.
In February, RIL entered into an agreement to sell a 30 per cent stake in its 23 Indian oil and gas blocks to BP for $7.2 billion, which will be paid in three instalments likely by end-2011. Fitch notes that most of RIL's upstream cash flows will come from the Krishna-Godavari natural gas block in the next few years, which should be relatively stable given the regulated pricing.
However, the gas output has fallen to 52-54 million standard cubic metres per day (mmscmd) from around 60mmscmd, significantly below Fitch's FY11 expectation of 80mmscmd. Moreover, the pricing of 12mmscmd (15 per cent of the peak output) is still subject to a legal dispute with NTPC, it said.
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