Adani Power to Acquire Reliance Power’s Butibori Plant in Rs 3,000 Crore Deal

Adani Power Ltd is negotiating to acquire the 600 MW Butibori thermal power project in Nagpur, previously owned by the now-insolvent Reliance Power Ltd of Anil Ambani, according to a report. The deal is expected to be valued between Rs 2,400 crore and Rs 3,000 crore, approximately Rs 4 crore to Rs 5 crore per MW. This acquisition will enable India’s leading private thermal power producer to meet the growing electricity demand in the country.

An official stated, “Adani Power is negotiating with CFM Asset Reconstruction Co to acquire the project under Vidarbha Industries Power Ltd. Previously valued at around Rs 6,000 crore, the project’s current production halt has lowered its valuation. The plant aligns with Adani’s strategy.”

Vidarbha Industries Power, a division of Reliance Power, operates the Butibori project. CFM ARC is the sole creditor, having bought its loans for Rs 1,265 crore. The official added, “Adani Group will fund the entire deal through internal accruals.”

Initially, JSW Energy Ltd, led by Sajjan Jindal, showed interest in the project but withdrew due to valuation and operational concerns. Reliance Power sourced power from Butibori while operating as a distributor in Mumbai, but Adani Electricity Mumbai Ltd later took over. 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.

Adani Group is looking to expand its thermal power capabilities. A recent presentation highlighted the need for reliable thermal power capacity due to rising peak power demand. Current negotiations value the plant significantly lower than typical thermal plants in India, as both units are non-operational due to a coal shortage.

The acquisition aligns with Adani’s strategy to connect its coal-fired power plant in Tiroda, 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 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 potential for expansion if the acquisition is completed.