Reliance Industries Acquires Stake in Adani Power Project

Reliance Industries Acquires Stake in Adani Power Project

Reliance Industries, under the leadership of Mukesh Ambani, has taken a substantial 26% share in a power project in Madhya Pradesh owned by Gautam Adani’s Adani Power. This is a historic move that represents the first-ever cooperation between two rival billionaire conglomerates. This strategic partnership between these two industry titans, valued at Rs. 50 crore, represents a significant turning point in the corporate landscape of India.

Leading Reliance Industries, headed by Mukesh Ambani, has acquired a 26% stake in Mahan Energen Ltd (MEL), an Adani Power Ltd. wholly-owned subsidiary. For a total of Rs. 50 crore, Reliance will purchase five crore equity shares of MEL at a face value of Rs. 10. The investment is a big step toward the two corporate giants’ relationship being cemented together.

The agreement between Reliance Industries and Adani Power encompasses a long-term Power Purchase Agreement (PPA) spanning 20 years, wherein Reliance will procure 500 megawatts (MW) of electricity from MEL’s Mahan thermal power plant. Notably, one unit with a capacity of 600 MW from the Mahan thermal power plant will be designated as the Captive Unit specifically for this purpose.

In an official statement released by Adani Power, it was highlighted, “Mahan Energen Limited (“MEL”), a wholly-owned subsidiary of Adani Power Limited (“APL” or the “Company”), has entered into a 20-year long-term Power Purchase Agreement (“PPA”) for 500 MW with Reliance Industries Limited (“RIL”), under the Captive User policy as defined under the Electricity Rules, 2005.”

The Captive User policy, as stipulated under the Electricity Rules, 2005, necessitates that Reliance Industries maintain a 26 per cent ownership stake in the Captive Unit, commensurate with the total capacity of the power plant. Consequently, Reliance has committed to investing in 500,000,000 equity shares of MEL, amounting to Rs. 50 crore, to secure its proportionate ownership stake in the Captive Unit.

Adani Power further clarified, “In order to avail the benefit of this policy, RIL has to hold a 26% ownership stake in the Captive Unit in proportion to the total capacity of the power plant. It will accordingly invest in 5,00,00,000 equity shares of MEL, aggregating to Rs. 50 crore for the proportionate ownership stake.”

This landmark deal signifies a significant stride towards fostering collaboration and synergy within the corporate landscape of India. The partnership between Reliance Industries and Adani Power heralds a new era of cooperation, setting a precedent for future collaborations within the industry.

“This development brings between two corporates an exclusive arrangement for 500 MW of power purchase by Reliance Industries on a long-term basis,” emphasized the statement released by Adani Power, underscoring the exclusivity and long-term commitment inherent in the partnership.

The strategic alliance between Reliance Industries and Adani Power holds immense potential for driving innovation, efficiency, and growth within the energy sector. By leveraging each other’s strengths and resources, these two industry giants are poised to revolutionize the landscape of power generation and distribution in India.

Moreover, this collaboration between Mukesh Ambani and Gautam Adani, two of India’s most prominent business tycoons, underscores the importance of cooperation and mutual benefit in driving sustainable development and economic growth.

The acquisition of a stake in Adani Power’s Madhya Pradesh power project by Reliance Industries marks a pivotal moment in the history of India’s corporate landscape. As these two industry titans join forces in pursuit of common goals, the ripple effects of their collaboration are poised to reshape the dynamics of the energy sector and propel India towards a brighter and more sustainable future.

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