Mumbai, Feb. 23: The board of Reliance Industries Ltd (RIL) is set to meet tomorrow to discuss funding plans for oil and gas exploration and production (E&P) business. But speculation swirled that it would also clear a preferential issue to promoters that would further consolidate Mukesh Ambani’s stake in the company.

In November last year, RIL had announced that it would raise $2 billion to fund its investment in E&P business. RIL then said that it was looking at a variety of options to raise this amount. These include syndicated loan, bonds, foreign currency convertible bonds or any combination.

However, in a recent communication to the stock exchanges, the oil giant had revealed that its board would meet on Saturday to “review” the decision taken by the board of directors at its meeting held on November 9, 2006 to raise $2 billion to finance capex plan for E&P business.

The company added that the board will also discuss raising of further resources to finance the on-going capital expenditure across several new projects through syndicate loans, non-convertible debentures, convertible debentures, external commercial borrowings, foreign currency convertible bonds, preference shares, warrants or any other instruments.

Unconfirmed reports now say that the board may approve a preference issue to promoters and other investors that may include foreign institutional investors (FIIs). However, an official of RIL refused to comment on the issue saying that since the company’s board was due to meet, he cannot speak anything on the subject.

The promoters of Reliance Industries Ltd have steadily been increasing their stake in the company via the creeping acquisition route. For the quarter ended December 31, 2006, they increased their holding by a little less than one per cent to a controlling level of 50.62 per cent from 49.92 per cent in the preceding quarter. For the period ended March 31, 2006, the promoter holding in RIL was at 47.90 per cent.

Interestingly, the RIL board is meeting after Chevron chief executive David J ’ Reilly met Mukesh Ambani in Mumbai on Wednesday.