Reliance acquires 26% stake in Adani’s power project

In a notable collaboration between two rival billionaires, Reliance Industries, led by Mukesh Ambani, has acquired a 26 percent stake in a power project located in Madhya Pradesh, owned by Gautam Adani, and has inked a deal to utilize 500 MW of electricity generated by the plants for captive use.

Under the terms of the agreement, Reliance will acquire five crore equity shares in Mahan Energen Ltd, a fully-owned subsidiary of Adani Power Ltd, at a face value of ₹10 each. This transaction amounts to ₹50 crore at par.

As part of the arrangement, one unit of the Mahan thermal power plant, which has a combined operating and planned capacity of 2800 MW, will be earmarked as the Captive Unit for this purpose.

Adani Power officially stated, “Mahan Energen Limited (“MEL”), a 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. One unit of 600 MW capacity of MEL’s Mahan thermal power plant, out of its aggregate operating and upcoming capacity of 2800 MW, will be designated as the Captive Unit for this purpose.”

To qualify for the benefits under the Captive User policy, RIL will hold a 26 percent ownership stake in the Captive Unit, corresponding to the total capacity of the power plant. The company will invest in 5,00,00,000 equity shares of MEL, amounting to Rs. 50 crore, to secure the proportional ownership stake.

Adani Power elaborated, “In order to avail the benefit of this policy, RIL has to hold a 26 percent 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.”

This agreement establishes an exclusive arrangement for Reliance Industries to purchase 500 MW of power from Adani Power on a long-term basis.

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