Adani Power shares in focus today. Here's why

July 10,2024

Shares of Adani Power Ltd are in focus on Wednesday after the Adani group firm, post market hours of Tuesday, said Mahan Energen Ltd has ceased to be a wholly-owned subsidiary of the company. 

The Adani Power arm had in March 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.

One unit of 600 MW capacity of MEL’s Mahan thermal power plant, out of its aggregate operating and upcoming capacity of 2800 MW, was designated as the captive unit for this purpose. In order to avail of the benefit under the said policy, RIL had to hold a 26 per cent ownership stake in the captive unit in proportion to the total capacity of the power plant. 

"Upon completion of all the conditions precedent mentioned under the Investment Agreement dated 27th March 2024, RIL has subscribed to, and MEL has issued and allotted to it 5,00,00,000 “Class B” equity shares with face value of Rs. 10 each, translating to 26 per cent proportionate ownership stake in the captive unit," Adani Power said.

The allotment, Adani Power said, would enable RIL to source reliable power supply from the captive unit under the exclusive arrangement between the two corporates. It demonstrated the advantage of mutually beneficial arrangement by enhancing MEL’s long-term revenue visibility, Adani Power said.