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Ambani’s Reliance, Adani’s Mahan Energen ink $6 million power deal

Mukesh Ambani-owned Reliance Industries announced an investment of ₹500 million, approximately $6 million, for a 26% stake in a 600 MW unit of Mahan Energen's thermal power plant, a wholly owned subsidiary of Gautam Adani

Ambani’s Reliance, Adani’s Mahan Energen ink $6 million power deal
[Source photo: Chetan Jha]

Mukesh Ambani-owned Reliance Industries announced an investment of ₹500 million (approximately $6 million) for a 26% stake in a 600 MW unit of Mahan Energen’s thermal power plant, a wholly owned subsidiary of Gautam Adani-led Adani Power, in a first of its kind strategic collaboration between two of India’s biggest conglomerates.

Both companies have entered into a 20-year power purchase agreement for 500 MW. Mahan Energen has agreed to allot 50 million equity shares of ₹10 face value each to RIL at par, Reliance Industries said in a regulatory filing.

RIL mentioned that the proposed investment by the company complies with the provisions of Electricity Rules, 2005, in terms of which the company, as a captive user, is required to own 26% proportionate ownership in one unit of MEL of 600 MW capacity, with RIL being the captive user of 500 MW generation capacity.

With this proposed investment, Reliance Industries Limited (RIL) and Mahan Energen Limited (MEL) have entered into a 20-year long-term power purchase agreement.

Gautam Adani’s MEL, a power supply and generation company, was established in October 2005. Per its audited standalone financial statement, MEL’s turnover rose to ₹2,731 crore ($327.6 million) in 2022-23 from ₹1,394 crore ($167.2 million) in the previous year.

Pranav Adani, managing director (Agro, oil and gas) and director of Adani Enterprises, shared that the group is investing ₹30,000 crore ($3.6 billion) in ramping up MEL’s power generation capacity to 4,400 MW. The expansion from the near-term target of 2,800 MW to 4,400 MW is expected to be completed in a year.

Located in Singrauli district, Madhya Pradesh, Mahan, formerly a unit by Essar Power, has a nameplate capacity to generate 1,200 MW. Adani Power acquired this plant for ₹4,250 crore ($510 million) in March 2023 after emerging as a top bidder in 2021.

In another regulatory announcement, Adani Power announced the consolidation of different short-term loans worth ₹19,700 crore ($2.36 billion) availed through six special purpose vehicles (SPVs) into a single long-term debt. With this arrangement, the company will benefit from a uniform tenure and reduce effective interest rates.

In the regulatory announcement, the company added that after Adani Power’s credit rating was enhanced to AA, the loan consolidation under a consortium financing arrangement comprising eight lenders became possible through the amalgamation of six SPVs.

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