Reliance Industries Invests Rs 50 Crore in Adani Power Project for Captive Use (Image Source: IANS)
In a significant development within the energy sector, Reliance Industries, led by Mukesh Ambani, has acquired a 26 per cent stake in a Madhya Pradesh power project owned by Gautam Adani‘s company.
The acquisition comes alongside a strategic agreement, as Reliance Industries secures 5 crore equity shares in Mahan Energen Ltd, a wholly owned subsidiary of Adani Power Ltd, at a nominal value of Rs 10 each, totaling Rs 50 crore.
As part of this deal, Reliance has inked a pact to utilize 500 MW of electricity generated by the power project for captive use, thereby ensuring a long-term power supply for its operations.
This development materialized following Mahan Energen Limited (MEL), a subsidiary of Adani Power Limited, entering into a 20-year long-term Power Purchase Agreement (PPA) with Reliance Industries Limited (RIL). Under this agreement, Reliance Industries is designated as a captive user, as per the provisions outlined in the Electricity Rules of 2005.
As per the company’s filing on the BSE, “Mahan Energen Limited (“MEL”), wholly owned subsidiary of Adani Power Limited (“APL” or the “Company”) has entered into a 20-year long-term Power Purchase Agreement (“PPA”) for 500 MW with Reliance Industries Limited (“RIL”), under the Captive User policy as defined under the Electricity Rules, 2005. 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 5,00,00,000 equity shares of MEL, aggregating to Rs. 50 crore for the proportionate ownership stake.”
One unit within MEL’s Mahan thermal power plant, boasting a capacity of 600 MW, will be specifically allocated as the Captive Unit for Reliance’s usage, out of the plant’s aggregate capacity of 2800 MW.
The signing of the Investment Agreement between Adani Power Ltd, Mahan Energen Ltd, and Reliance Industries took place on March 27, 2024.
