Reliance Industries (RIL) and Adani Power have entered into a significant 20-year power purchase agreement for 500 MW, marking a noteworthy collaboration between two of India's leading conglomerates, led by Mukesh Ambani and Gautam Adani, respectively.
Under this agreement, RIL will invest Rs 50 crore to acquire a 26% stake in a 600 MW unit of Mahan Energen's thermal power plant, a subsidiary of Adani Power. Mahan Energen has agreed to allot 50 million equity shares of Rs 10 face value each to RIL at par, in compliance with the Electricity Rules, 2005.
While RIL did not specify the purpose of the power purchase agreement, Adani Power revealed that one unit of the Mahan thermal power plant, with an aggregate operating and upcoming capacity of 2,800 MW, will be designated as the captive unit for this purpose.
The Adani Group is committed to investing approximately Rs 30,000 crore to enhance Mahan Energen's power generation capacity to 4,400 MW over the next decade. Currently, Mahan Energen has a total capacity of 1,200 MW, with plans for significant expansion. Located in Singrauli district, Madhya Pradesh, Mahan Energen was acquired by Adani Power for Rs 4,250 crore in March last year from Essar Power.
Mahan Energen's financial statements for FY21, FY22, and FY23 show a steady increase in turnover, indicating its growth trajectory. RIL clarified that the investment is not a related party transaction, and none of the company's promoters, promoter groups, or affiliated companies have any vested interests in the investment. The completion of the deal is subject to customary conditions and approvals by Mahan Energen.
