This big move set to benefit Reliance Industries! Find out how

On Friday, Brookfield filed for the preliminary placement memorandum under the terms of India Infrastructure Trust (InvIT). The InvIT set up by Brookfield as sponsor and 90% investor, will invest a whopping Rs 13,000 crore to acquire Reliance Industries East West Pipeline. With this,InvIT will acquire 100% equity interest in Pipeline Infrastructure Private Limited (PIPL) which currently owns and operates the pipeline. Following the new deal, RIL has reworked the existing pipeline usage agreement.

Here's top highlights of how the Reliance Industries deal will be:

1. The reserved capacity reduced to 33 MMSCMD against the 56 MMSCMD.

2. Any unutilized capacity payment by RIL will be the difference between Rs. 500 crore a quarter and actual revenue earned by PIPL.

3. 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

What Reliance Industries gets:

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.

Further, 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.

RIL in its statement said, "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 to the current levels."

In this deal, RIL will be entitled to a significant participation in the net earnings of PIPL under the mechanism specified in the pipeline usage agreement.

Currently, RIL's investment in preference shares valued at Rs 4,000 crore to continue and will be converted into equity at the end of 20 years.

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.