Reliance Power said in a regulatory filing on Wednesday that it has repaid ₹3,872.04 crore as a corporate guarantor of the debt of its former subsidiary Vidarbha Industries Power. Vidarbha Industries owns the 600 MW thermal power plant at Butibori in Nagpur, which the Adani Group is looking to acquire.
August 19, Mint Adani Power Ltd has reportedly started talks with CFM Asset Reconstruction to acquire the Butibori power plant. CFM has acquired all the loans for the Butibori project. ₹1,265 crores.
Adani Group, India’s largest private thermal power producer, is negotiating a deal worth approx. ₹The company is acquiring the Butibori plant for Rs 24,000-30,000 crore, hoping to tap India’s growing power demand.
The Butibori project had initially attracted interest from JSW Energy Ltd, but the Sajjan Jindal-promoted company withdrew from the bidding citing valuation and operational issues, a source familiar with the matter said earlier. Mint Report.
Adani Group is keen to expand its thermal power capacity. In an August presentation, the group said India’s growing peak power demand “underscores the need for dispatchable capacity which can best be met by thermal power”.
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Currently, two units (300 MW each) of the Butibori thermal power plant are shut due to insufficient coal supply.
If the acquisition talks bear fruit, the project could be revived as Adani Group has secured coal supplies for its 3.3 GW coal-fired supercritical thermal power plant in Tiroda, about 125 km from Nagpur. The group plans to integrate its Tiroda plant with the Butibori project.
This will enable it to resume power generation from the two units at Butibori and supply electricity to Mumbai and other surrounding areas, competing with Tata Power Ltd and Maharashtra State Electricity Distribution Ltd.
The Tiroda plant has a long-term power purchase agreement with the Maharashtra government for 3,085 MW of power and the plant’s power output is likely to increase further if the Butibori project acquisition is successful.
Settlement with Adani Group
Adani Group has already been involved in the Butibori project.
When Vidarbha Industries was under Reliance Power, it had a power purchase agreement with Adani Electricity Mumbai Ltd, which expired on December 16, 2019. Prior to this, the Butibori project was the main power supplier to Mumbai.
The termination of the agreement led to a series of repayment defaults and arbitration disputes between Adani Group and Reliance Power. Reliance Power said in a separate statement on Wednesday that the two sides had reached a settlement and both parties withdrew all arbitration claims against each other.
Reliance Power said it has entered into certain agreements with Mumbai-based Adani Power and Adani Energy Solutions Ltd regarding “resolution of the dispute and withdrawal of each other’s arbitration claims on September 17, 2024 as mutually agreed”.
Reliance Power said on Wednesday that the dispute involves violation of the terms of the share purchase agreement signed on December 21, 2017 to transfer the Mumbai power business to Adani Energy Solutions.
Adani Energy Solutions added in a separate exchange filing that the two groups “have agreed to resolve all disputes and withdraw all claims… in relation to the share purchase agreement entered into on December 21, 2017”.
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Under the settlement agreement reached with CFM, Reliance Power has pledged 100% of Vidarbha Power shares to the asset reconstruction company. In exchange, CFM released the corporate guarantee provided by Reliance Power for the outstanding debt of Vidarbha Power for an amount of ₹3,872.04 crores.
Subsequently, Reliance Power said in the filing that Axis Trustee Services, which is the trustee of CFM, and Axis Bank, a lender to Vidarbha Power, have initiated the share pledge and taken over the management control of Vidarbha Power.
“Vidarbha Power is now no longer a subsidiary of Reliance Power. The company (Reliance Power) has also achieved zero debt status,” Reliance Power said, adding that as per the latest agreement with CFM, the consolidated net worth of the Anil Ambani entity is ₹11,155 crores.
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