Millennium Post (Kolkata)

Reliance picks 26% stake in Adani Power project in Madhya Pradesh

Reliance will pick up 5 crore equity shares in Mahan Energen Ltd, a wholly owned subsidiary of Adani Power Ltd, of face value Rs 10 at par

- OUR CORRESPOND­ENT

In the first collaborat­ion between rival billionair­es, Mukesh Ambani’s Reliance Industries has picked up a 26 per cent stake in a Madhya Pradesh power project of Gautam Adani, and signed a pact to use the plants’ 500 MW of electricit­y for captive use.

Reliance will pick up 5 crore equity shares in Mahan Energen Ltd, a wholly owned subsidiary of Adani Power Ltd, of face value Rs 10 at par (Rs 50 crore) and will use 500 MW of generation capacity for captive use, the two firms said in separate stock exchange filings.

With Ambani’s interests spanning oil and gas to retail and telecom and Adani’s focus on infrastruc­ture spanning sea ports to airports, coal and mining, they rarely crossed each other’s path except in the clean energy business where the two have announced multi-billion investment­s.

Adani aspires to be the world’s largest renewable energy producer by 2030 while Reliance is building four gigafactor­ies at Jamnagar in Gujarat — one each for solar panels, batteries, green hydrogen, and fuel cells.

Adani is also building three giga factories for manufactur­ing solar modules, wind turbines and hydrogen electrolys­ers.

A clash was also forecast when Adani group applied to participat­e in an auction of spectrum or airwaves capable of carrying fifth generation (5G) data and voice services. However, unlike Ambani, Adani bought 400 MHz spectrum in the 26 GHz band, which is not for public networks.

“Mahan Energen Ltd (MEL), wholly owned subsidiary of Adani Power Ltd (APL), has entered into a 20-year longterm power purchase agreement (PPA) for 500 MW with Reliance Industries Ltd (RIL), under the captive user policy as defined under the Electricit­y Rules, 2005,” Adani Power said in the filing.

One unit of 600 MW capacity of MEL’s Mahan thermal power plant, out of its aggregate operating and upcoming capacity of 2,800 MW, will be designated as the captive unit for this purpose.

A generating plant declared as a captive generating plant (CGP) is required to abide by the rules that state that the captive user(s) consuming the power generated from the captive generating plant for self-use must necessaril­y hold not less than 26 per cent of the ownership in the captive generating company.

“In order to avail the benefit of this policy, RIL has to hold a 26 per cent ownership stake in the captive unit in proportion to the total capacity of the power plant. It will accordingl­y invest in 5 crore equity shares of MEL, aggregatin­g to Rs 50 crore for the proportion­ate ownership stake,” the filing said.

“This developmen­t brings between two corporates an exclusive arrangemen­t for 500 MW of power purchase by Reliance Industries on a long-term basis.”

It is unclear where Reliance intends to use the MEL power. It already has captive units at mega oil refining and petrochemi­cal complexes in Gujarat and Maharashtr­a and its coalbed methane (CBM) extraction­s in Sohagpur in Madhya Pradesh may not need 500 MW of electricit­y.

“In this connection, APL, MEL, and RIL have signed an investment agreement on 27th March 2024 at 7:00 pm. Closing of the transactio­n is subject to customary closing conditions including receipt of requisite approvals,” Adani Power said.

Reliance in the filing made a similar disclosure, adding, “MEL, a company engaged in generation and supply of power, was incorporat­ed on October 19, 2005. The turnover of MEL, as per its audited standalone financial statement, for financial years 2022-23, 2021-22 and 2020-21 was Rs 2,730.68 crore, Rs 1,393.59 crore and Rs 692.03 crore, respective­ly.”

With Ambani’s interests spanning oil and gas to retail and telecom and Adani’s focus on infrastruc­ture spanning sea ports to airports, coal and mining, they rarely crossed each other’s path except in the clean energy business

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