Adani in talks to buy Anil Ambani’s Reliance Power project in Butibori

Gautam Adani's Adani Power Limited is in talks to buy the 600 megawatt (MW) thermal power project in Butibori, Nagpur, which was owned by Anil Ambani’s now-insolvent Reliance Power Limited. Unconfirmed reports estimate the value of the deal could range from Rs 2,400 crore to Rs 3,000 crore, or Rs 4 crore to 5 crore per megawatt.

Vidarbha Industries Power, a division of Reliance Power, has been the operator of the twin-plant Butibori project. The only creditor of the project at the moment is CFM Asset Reconstruction Private Limited, or CFM ARC, an asset reconstruction company authorised by the Reserve Bank of India. CFM ARC bought over loans of the project for Rs 1,265 crore.

The Butibori project is currently being valued at below its original estimated value of Rs 6,000 crore because no production has happened in the two plants in a while, mainly owing to coal shortage. The Adani Group’s internal accruals would fund the deal, a Mint report said, adding that JSW Energy had at one point evinced interest in the project but subsequently retracted, mainly driven by logistics such as operational issues and valuation.

Reliance Power in the past functioned as the Mumbai-based distributor of the Butibori project before the business was taken over by Adani Electricity Mumbai Limited. Financial problems for the project began after Adani’s agreement with Vidarbha Industries was over on December 16, 2019. Since then, many lenders have initiated bankruptcy proceedings against Vidarbha Industries, though the company has not yet been declared officially insolvent.

While Vidarbha Industries has struggled lately to run the Butibori project owing to coal shortage, the Adani Group’s strategy would be to connect the project with its Tiroda power plant near Nagpur, which runs on coal. The combined power generation would benefit Mumbai and neighbouring areas, said the report, and boost Adani’s position against competitors such as Tata Power and MSEDCL.