RIL buys 26% stake in Adani’s Mahan unit for Rs 50 cr to secure captive power

MEL operates two power units, each with a capacity of 600 MW. Adani Power acquired MEL from Essar Power in March 2022

In a deal involving two of India’s largest conglomerates, Mukesh Ambani’s Reliance Industries Ltd (RIL) will buy a 26 percent stake in Mahan Energen Ltd (MEL), a unit of Adani Power led by Gautam Adani.

RIL will acquire 5 crore shares of MEL for Rs 50 crore, giving the company access to 500 megawatts (MW) capacity that it plans to use for captive purposes, the companies told exchanges separately on March 28. MEL operates two power units, each with a capacity of 600 MW. Adani Power acquired MEL from Essar Power in March 2022.

“The proposed investment by the company is in compliance with the provisions of Electricity Rules, 2005 in terms of which the company, as a captive user, is required to own 26 percent proportionate ownership in one unit of MEL of 600 MW capacity, with RIL being the captive user of 500 MW generation capacity,” RIL said in a statement.

MEL and RIL have entered a 20-year power-purchase agreement.

The transaction between Adani Power and RIL is in line with the captive user policy as defined under the Electricity Rules, 2005, both companies said.

Adani Power said that a 600 MW unit of MEL’s Mahan thermal power plant will serve as the captive unit for RIL. “This development brings between two corporates an exclusive arrangement for 500 MW of power purchase by Reliance Industries on a long-term basis,” Adani Power said.

The two groups signed an investment agreement on March 27. The transaction closure is subject to customary closing conditions, including receipt of requisite approvals.

MEL has an operational capacity of 1,200 MW with plans to add another 1,600 MW.

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

Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.