Ambani, Adani collaborate as Reliance buys 26% stake in Adani Power project

The two giants have also entered into an agreement to utilize the plant's 500 MW electricity output for captive purposes.

Reliance will acquire 5 crore equity shares in Mahan Energen Ltd, a wholly-owned subsidiary of Adani Power Ltd, with a face value of Rs 10 at par (totalling Rs 50 crore), the two companies said in separate stock exchange filings.

Adani aims to become the world's largest renewable energy producer by 2030, while Reliance is in the process of constructing four gigafactories in Jamnagar, Gujarat. These gigafactories will focus on producing solar panels, batteries, green hydrogen, and fuel cells respectively.

Additionally, Adani is embarking on the construction of three giga factories dedicated to manufacturing solar modules, wind turbines, and hydrogen electrolysers.

The possibility of rivalry between the two conglomerates has been often mentioned in media reports, especially when Adani Group participated in an auction of 5G spectrum or airwaves.

However, unlike Ambani, Adani purchased 400 MHz spectrum in the 26 GHz band, which is not for public networks.

"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.

One unit with a capacity of 600 MW from MEL's Mahan thermal power plant, out of its total operational and planned capacity of 2,800 MW, will be designated as the captive unit for this purpose.

As per regulations, a generating plant declared as a captive generating plant (CGP) must adhere to the requirement stating that the captive user(s) utilizing the power generated from the captive generating plant for self-consumption must hold a minimum ownership stake of 26 percent in the captive generating company.

"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."

"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.

Reliance in the filing made a similar disclosure, adding, "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," it added.