 "Adani Group (Photo: Bloomberg)")
Adani Power Ltd has initiated discussions to purchase the 600 MW Butibori thermal power project in Nagpur, previously owned by the now-insolvent Reliance Power Ltd of Anil Ambani, according to a Mint report.
The report said that the deal is expected to be valued between Rs 2,400 crore and Rs 3,000 crore, which equates to approximately Rs 4 crore to Rs 5 crore per MW. Acquiring the project would enable India’s leading private thermal power producer to leverage the growing demand for electricity in the country, the report said.
The report quoted an official as saying, “Adani Power is negotiating with CFM Asset Reconstruction Co to acquire the project under Vidarbha Industries Power Ltd. The value of the project, which consists of two power plant units, was earlier around Rs 6,000 crore, but currently, the production (power generation) has stopped; so, the valuation has to be lower. The plant fits into Adani’s strategy.”
The Butibori project is operated by Vidarbha Industries Power, a division of Reliance Power. Currently, CFM ARC is the sole creditor of the project, having purchased its loans for Rs 1,265 crore. The official said, “The entire deal will be funded through the internal accruals of Adani group.”
Adani Group eyes expansion amid Vidarbha bankruptcy
JSW Energy Ltd, led by Sajjan Jindal, initially expressed interest in the project but later withdrew due to concerns over valuation and operational issues, according to the report.
Previously, Reliance Power sourced power from Butibori while it operated as a distributor in Mumbai. Subsequently, Adani Electricity Mumbai Ltd took over the Mumbai distribution business. The power purchase agreement between Vidarbha and Adani expired on December 16, 2019, leading to financial difficulties for the Butibori project. Lenders have filed for bankruptcy proceedings against Vidarbha Industries, although the company has not yet entered insolvency, the report said.
The Adani group is looking to expand its thermal power capabilities. In a recent presentation, the group highlighted that rising peak power demand underscores the need for reliable thermal power capacity.
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Adani’s strategic push amid coal shortage
Current negotiations are valuing the plant significantly lower than the typical price for thermal plants in India, as both units are currently non-operational due to a shortage of coal, the source said, as quoted by the report.
The acquisition aligns with Adani’s strategy to connect its coal-fired power plant in Tiroda, situated near Nagpur, with the Butibori project. This integration aims to resume power generation and supply electricity to Mumbai and nearby areas, enhancing Adani’s competitive position against rivals Tata Power and MSEDCL, the report said.
The Tiroda project, featuring 3.3 GW of coal-based supercritical capacity, is located around 125 km from Nagpur on the Bhandara-Gondia state highway, where the Butibori Power project is situated. The Butibori project has a long-term Power Purchase Agreement (PPA) with Maharashtra state for 3085 MW, with the potential for expansion if the acquisition is completed.
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