Variable Interest Entities

6 Months Ended

Mar. 31, 2023

Consolidated Variable Interest Entities Disclosure [Abstract]

VARIABLE INTEREST ENTITIES

We are the primary beneficiary of the NEOM Green Hydrogen Company joint venture ("NGHC"), which is a variable interest entity ("VIE") that is consolidated in our Middle East and India segment. We are not the primary beneficiary of any other material VIEs. We account for a VIE for which we exercise significant influence but are not the primary beneficiary, such as the Jazan Integrated Gasification and Power Company joint venture, as an equity method investment. For additional information on this joint venture, refer to Note 7, Equity Affiliates.

The table below summarizes balances associated with NGHC as reflected on our consolidated balance sheets. For additional information on this joint venture, refer to the "NEOM Green Hydrogen Project" section that follows.


	31 March	30 September
	2023	2022
Assets
Cash and cash items	$129.2	$274.7
Trade receivables, net	—	1.3
Prepaid expenses	3.3	0.1
Other receivables and current assets	52.3	23.3
Plant and equipment, net	613.3	218.8
Other noncurrent assets	11.1	1.5
Total Assets	$809.2	$519.7

Liabilities
Payables and accrued liabilities	73.6	58.1
Accrued income taxes	0.4	—

Long-term debt – related party(A)	476.7	447.3
Other noncurrent liabilities	3.0	1.4
Total Liabilities	$553.7	$506.8

Noncontrolling interests(A)	$2.6	$30.0

(A)During the second quarter of fiscal year 2023, approximately $29 of investments attributable to the noncontrolling partner of NGHC were converted to shareholder loans. This noncash activity is presented within “Other equity transactions” related to noncontrolling interests on our consolidated statements of equity for the three and six months ended 31 March 2023.

NEOM Green Hydrogen Project

In the fourth quarter of fiscal year 2020, we announced the NEOM Green Hydrogen Project (the "NEOM project”), a multi-billion dollar green hydrogen-based ammonia production facility powered by renewable energy located in the NEOM city of the Kingdom of Saudi Arabia. We, along with our joint venture partners, ACWA Power and NEOM Company, are equal owners in NGHC, which will develop, construct, own, operate, and finance the NEOM project. The NEOM project is expected to be financed through non-recourse project financing and the partners’ investments.

During the third quarter of fiscal year 2022, we entered into an agreement with NGHC under which we commenced construction of the NEOM project. In addition, we executed an agreement with NGHC under which we will be the exclusive offtaker of green ammonia produced by the NEOM project under a long-term take-if-tendered agreement. The NEOM project is expected to be on-stream in 2026. We intend to transport green ammonia around the world to be dissociated to produce green hydrogen, primarily for the transportation market.

Air Products has one-third of the voting interests in the NGHC joint venture; however, substantially all the activities of the joint venture involve or are conducted on behalf of Air Products. Since we have disproportionately few voting rights relative to our economic interests in the joint venture, we determined that NGHC is a variable interest entity. In addition, we determined that we are the primary beneficiary of NGHC since we have the power to unilaterally direct certain significant activities, including key design and construction decisions, and we share power with our joint venture partners related to other activities that are significant to the economic performance of NGHC. Therefore, we consolidated NGHC within the Middle East and India segment beginning in the third quarter of fiscal year 2022.