Billionaire businessmen Mukesh Ambani and Gautam Adani are set to collaborate for the first time as Reliance Industries has picked up a 26 per cent stake in a Madhya Pradesh power project of the Adani Group.
Reliance will pick up 5 crore equity shares in Mahan Energen Ltd, a wholly owned subsidiary of Adani Power Ltd, of face value Rs 10 at par (Rs 50 crore) and will use 500 MW of generation capacity for captive use, both the firms said in separate stock exchange filings.
The two businessmen, hailing from Gujarat, are often perceived as rivals.
With Ambani's interests spanning oil and gas to retail and telecom and Adani's focus on infrastructure spanning seaports to airports, coal and mining, they rarely crossed each other's path except in the clean energy business.
Adani aspires to be the world's largest renewable energy producer by 2030 while Reliance is building four gigafactories at Jamnagar in Gujarat—one each for solar panels, batteries, green hydrogen, and fuel cells.
Adani is also building three giga factories for manufacturing solar modules, wind turbines and hydrogen electrolysers.
"Mahan Energen Ltd (MEL), wholly owned subsidiary of Adani Power Ltd (APL), has entered into a 20-year long-term power purchase agreement (PPA) for 500 MW with Reliance Industries Ltd (RIL), under the captive user policy as defined under the Electricity Rules, 2005," Adani Power said in the filing.
"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 crore equity shares of MEL, aggregating to Rs 50 crore for the proportionate ownership stake," the filing said.
"This development brings between two corporates an exclusive arrangement for 500 MW of power purchase by Reliance Industries on a long-term basis."
It is unclear where Reliance intends to use the MEL power. It already has captive units at mega oil refining and petrochemical complexes in Gujarat and Maharashtra and its coal-bed methane (CBM) extractions in Sohagpur in Madhya Pradesh may not need 500 MW of electricity.
"This development brings between two corporates an exclusive arrangement for 500 MW of power purchase by Reliance Industries on a long-term basis."
"In this connection, APL, MEL, and RIL have signed an investment agreement on 27th March 2024 at 7:00 pm. Closing of the transaction is subject to customary closing conditions including receipt of requisite approvals," Adani Power said.
The exchanges filing by Reliance read: "MEL, a company engaged in generation and supply of power, was incorporated on October 19, 2005. The turnover of MEL, as per its audited standalone financial statement, for financial years 2022-23, 2021-22 and 2020-21 was Rs 2,730.68 crore, Rs 1,393.59 crore and Rs 692.03 crore, respectively."
"The investment is subject to customary conditions precedent including receipt of requisite approvals by MEL and is expected to be completed within 2 weeks of receipt of completion of conditions precedent and receipt of such approvals by MEL."
—With PTI inputs
