Adani Power Ltd has entered into talks to buy the 600 MW Butibori thermal power project in Nagpur, formerly owned by Anil Ambani’s now insolvent Reliance Power Ltd, according to a Mint report.
The report said the deal is expected to be worth Rs 2,400-3,000 crore, which roughly amounts to Rs 4-5 crore per MW. Acquiring the project would enable India’s largest private thermal power producer to tap into the growing demand for electricity in the country, the report said.
The report quotes an official as saying, “Adani Power is in talks with CFM Asset Reconstruction Co to acquire the project from 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, production (power generation) has stopped; hence, the valuation has to be lower. The plant fits into Adani’s strategy.”
The Butibori project is being undertaken by Vidarbha Industries Power, a division of Reliance Power. Currently, CFM ARC is the sole creditor of the project, having acquired its loans of Rs 1,265 crore. The official said, “The entire deal will be funded through the domestic revenues of the Adani group.”
Adani Group eyes expansion amid Vidarbha bankruptcy
JSW Energy Ltd, led by Sajjan Jindal, initially expressed interest in the project but later pulled out due to concerns over valuation and operational issues, the report said.
Earlier, Reliance Power was getting power from Butibori while operating as a distributor in Mumbai. Later, 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 a bankruptcy petition against Vidarbha Industries, though the company has not yet entered bankruptcy, the report said.
The Adani Group is looking to expand its thermal power generation capacity. In a recent presentation, the group highlighted that rising peak power demand underscores the need for reliable thermal power generation capacity.
Adani’s strategic push amid coal shortage
Current negotiations are valuing the plant significantly below the typical price for thermal plants in India as both units are currently non-operational due to coal shortages, the source was quoted as saying by the report.
The acquisition is in line with Adani’s strategy to connect its coal-fired power plant at Tiroda, located near Nagpur, with the Butibori project. This integration is aimed at resuming power generation and supplying electricity to Mumbai and nearby areas, improving Adani’s competitive position vis-a-vis rivals Tata Power and MSEDCL, the report said.
The Tiroda project, with 3.3 GW of coal-based supercritical capacity, is located about 125 km from Nagpur on the Bhandara-Gondia state highway, where the Butibori Power project is located. The Butibori project has a long-term power purchase agreement (PPA) with the state of Maharashtra for 3,085 MW, with potential for expansion if the acquisition is completed.
First published: August 19, 2024 | 10:40 a.m. IS
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