Adani teams up with Ambani – Reliance takes stake in Adani projects.First

Mukesh Ambani’s Reliance Industries acquires 26% stake in Adani power project

New Delhi:

In the first tie-up between billionaires, Mukesh Ambani’s Reliance Industries acquired a 26% stake in Gautam Adani’s Madhya Pradesh power project, and signed an agreement to use the plant’s 500 megawatts of power for its own purposes.

Reliance will acquire a Rs 5-crore equity stake in Mahan Energen Ltd, a wholly-owned subsidiary of Adani Power Ltd, with a face value of Rs 10 per share (approximately Rs 50 crore) and will use 500 MW of power generation capacity for its own operations, the companies said. There are used in separate stock exchange filings.

The two businessmen from Gujarat are often pitted against each other by the media and commentators, but they have carefully avoided each other for years in their quest to reach the top two rungs of Asia’s wealth ladder.

Mr Ambani’s interests span oil and gas, retail and telecoms, while Mr Adani focuses on infrastructure from seaports to airports, coal and mining. The two have little overlap except in their clean energy businesses. Billions of dollars have been announced to invest in this area.

Mr Adani aspires to become the world’s largest producer of renewable energy by 2030, while Reliance is building four gigafactories – one each to produce solar panels, batteries, green hydrogen and fuel cells – in Jamnagar, Gujarat.

Mr Adani is also building three giant factories to make solar modules, wind turbines and hydrogen electrolysers.

Clashes are also expected when Adani Group applies to participate in an auction of spectrum or airwaves capable of carrying fifth-generation (5G) data and voice services. However, unlike Mr Ambani, Mr Adani purchased 400 MHz of spectrum in the 26 GHz band, which is not available for public networks.

On the contrary, the two are far from rivals. In 2022, a company once linked to Mr Ambani sold its stake in news broadcaster NDTV to Adani, paving the way for the takeover.

Adani also attended the pre-wedding celebrations of Ambani’s youngest son Anant in Jamnagar earlier this month.

“Mahan Energen Ltd (MEL), a wholly owned subsidiary of Adani Power Ltd (APL), has entered into a 20-year long-term power purchase agreement (PPA) with Reliance Industries Ltd (RIL) for 500 MW under the Captive Consumers Electricity Rules 2005 defined policy,” Adani Power said in the document.

One 600 MW unit of MEL’s Mahan Thermal Power Plant will be designated as a captive unit for this purpose, with a total operational and upcoming capacity of 2,800 MW.

A power plant declared as a captive power plant (CGP) must comply with the following regulations: A captive user of electricity generated from a captive power plant must hold an ownership stake of not less than 26% in the captive power company.

“In order to benefit from this policy, Reliance Industries must hold 26 per cent equity stake in the total captive power plant capacity. Accordingly, Reliance Industries will invest Rs 5 crore in equity in MEL, totaling Rs 50 crore for pro-rata equity, ” the document states.

“This development brings the two companies to an exclusive arrangement for the long-term purchase of 500 MW of power by Reliance Industries.” It is unclear where Reliance intends to use the MEL power. The company already has captive units at large refining and petrochemical complexes in Gujarat and Maharashtra, while its coal bed methane (CBM) mining in Sohagpur, Madhya Pradesh, may not require 500 MW of power.

“In this regard, APL, MEL and RIL have signed an investment agreement on March 27, 2024 at 7:00 pm. Completion of the transaction is subject to customary closing conditions, including receipt of necessary approvals,” Adani Power said.

Reliance made similar disclosures in the filing, adding, “MEL is a company engaged in generation and supply of electricity and was incorporated on October 19, 2005. As per its audited standalone financial statements, MEL’s operations for FY2022 Amount – 2730.68 million rupees, 1393.59 million rupees and 692.03 billion rupees for 2021-22 and 2020-21 23 respectively.

“The investment is subject to customary conditions precedent, including receipt of the necessary approvals from MEL, and is expected to be completed within two weeks upon completion of the conditions precedent and receipt of approval from MEL,” it added.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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