To secure captive power, RIL pays 50 crores for a 26% stake in Adani Power’s unit

Reliance Industries (RIL), owned by Mukesh Ambani, will purchase a 26% share in Mahan Energen Ltd. (MEL), a Gautam Adani-led Adani Power subsidiary.

The Mahan Energen thermal power plant’s 600 MW unit will see a 26% interest purchase by the Mukesh Ambani business for Rs 50 crore. The latter is a fully owned division of Adani Power, which is overseen by Gautam Adani.

Reliance said in a regulatory filing that Mahan Energen has consented to assign 50 million equity shares to RIL at par, with a face value of Rs 10. The statement said, “The company’s proposed investment complies with the Electricity Rules, 2005.” RIL did not provide a clear explanation for why it signed the power purchase deal.

“One unit of 600 MW capacity at the 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,” Adani Power stated in a regulatory filing announcing the deal with RIL.

There is a 20-year power-purchase agreement between MEL and RIL.

Both Adani Power and RIL said that their transaction complies with the Electricity Rules, 2005’s definition of the captive user policy.

On March 27, an investment agreement was signed by the two parties. The deal conclusion is contingent upon the fulfillment of normal closing requirements, such as obtaining the necessary approvals.

MEL intends to add an additional 1,600 MW to its current 1,200 MW of operating capacity.

“The investment is anticipated to be completed within two weeks of the completion of conditions precedent and the receipt of such approvals by MEL,” RIL said. “The investment is subject to customary conditions precedent, including receipt of requisite approvals by MEL.”