Mumbai: In a groundbreaking move, Reliance Industries, headed by Mukesh Ambani, has purchased a 26 per cent stake in a Madhya Pradesh power project owned by Gautam Adani, marking the first collaboration between the two competing billionaires.
The collaboration includes an agreement for Reliance to utilize the plant’s 500 MW electricity output for captive purposes.
Reliance will acquire 5 crore equity shares in Mahan Energen Ltd, a wholly-owned subsidiary of Adani Power Ltd, valued at Rs 10 per share, totalling Rs 50 crore, as per separate stock exchange filings by the two companies.
Adani has set a goal to become the world’s largest renewable energy producer by 2030, while Reliance is currently constructing four gigafactories in Jamnagar, Gujarat, focusing on producing solar panels, batteries, green hydrogen, and fuel cells.
Additionally, Adani is progressing with the construction of three giga factories dedicated to manufacturing solar modules, wind turbines, and hydrogen electrolysers.
Despite media speculation regarding rivalry between the two conglomerates, especially during Adani Group’s participation in an auction of 5G spectrum or airwaves, Adani purchased 400 MHz spectrum in the 26 GHz band, which is not for public networks.
“Mahan Energen Ltd (MEL), a wholly owned subsidiary of Adani Power Ltd (APL), has entered into a 20-year long-term 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 stated in its filing.
One unit with a capacity of 600 MW from MEL’s Mahan thermal power plant, out of its total operational and planned capacity of 2,800 MW, will be designated as the captive unit for this purpose.
According to regulations, a generating plant declared as a captive generating plant (CGP) must adhere to the requirement that the captive user(s) utilizing the power generated from the captive generating plant for self-consumption must hold a minimum ownership stake of 26 per cent 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 establishes an exclusive arrangement for 500 MW of power purchase by Reliance Industries on a long-term basis.”
“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 made a similar disclosure in its filing, stating, “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.”
“The investment is subject to customary conditions precedent including receipt of requisite approvals by MEL and is expected to be completed within 2 weeks of receipt of completion of conditions precedent and receipt of such approvals by MEL,” it added.