Mukesh Ambani and Gautam Adani have first time collaborated, Ambani’s Reliance Industries has acquired a significant 26% stake in a power project owned by Gautam Adani in Madhya Pradesh. This landmark agreement also includes a pact wherein Reliance will utilize 500MW of electricity from the plant for its operations.
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Investment Details
Reliance Industries will acquire 5 Cr equity shares in Mahan Energen Limited which is a subsidiary of Adani Power Limited, at a face value of INR 10 each, totaling INR 50 Cr. This investment signifies Reliance’s entry into the power sector in collaboration with Adani, which is a a notable competitor in the industry.
Captive Unit Agreement
According to the agreement between the 2 companies, one unit of the Mahan Thermal Power Plant, with a total capacity of 2800 MW, will be designated as the Captive Unit for Reliance’s usage. This unit, with a capacity of 600 MW, will exclusively cater to Reliance’s power needs under a 20-year long-term Power Purchase Agreement (PPA).
Official Statements
In an official statement released by Adani Power, it stated that “Mahan Energen Limited has entered into a 20-year long-term Power Purchase Agreement for 500 MW with Reliance Industries Limited under the Captive User Policy.” This move is following the Electricity Rules, 2005.
Reliance’s investment in the Captive Unit ensures its eligibility for the benefits outlined in the Captive User policy, securing its long-term power requirements through this strategic collaboration.
Exclusive Power Purchase Arrangement
The collaboration of 2 major billionaires marks a significant development in the Indian Corporate Landscape. Reliance Industries secures a reliable power source for its operations, while Adani Power gains a prominent Partner in its ventures.
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“This exclusive arrangement for 500 MW of power purchase by Reliance Industries on a long-term basis strengthens the ties between the two corporates,” stated the official release, underscoring the significance of this strategic alliance in the power sector.
