In a rejig, Adani Power to hive off Mundra plant

| Updated on: Jun 05, 2017

Gujarat Urja Vikas Nigam may pick controlling stake

The board of Adani Power Ltd (APL) on Monday said it plans a slump sale of its power generating plant at Mundra in Gujarat. The Mundra Power Generating Business Undertaking will be sold to APL’s own subsidiary, Adani Power (Mundra) Ltd.

According to sources, Gujarat Urja Vikas Nigam Ltd (GUVNL), the parent body of state discoms, might consider picking up the controlling stake of 51 per cent in the new subsidiary.

A top source in GUVNL did not confirm the likelihood of picking up a stake in Adani’s Mundra Power Project. However, the official, not willing to be quoted, did not rule out the possibility either.

“There can be such a deal, but it requires a lot of due diligence. Picking up a stake comes with a lot of liabilities. We need to workout and verify financials and legal aspects of the deal. It is very premature to comment on a possibility of such a deal,” the official said.

The 4,620-MW Mundra plant is currently Adani’s largest power generating asset being directly owned and operated by the company. APL also holds investment in three wholly owned subsidiaries that own and operate 3,300 MW at Tiroda, 1,320 MW at Kawai, and 1,200 MW at Udupi power plants respectively.

“As part of a restructuring exercise, APL wants to separate its investment activity from the generating asset. It has therefore proposed to transfer the Mundra plant to a separate subsidiary by way of slump sale subject to Board and necessary approvals, and retain the investments in subsidiaries with itself,” an Adani Power spokesperson said.

“Consequent to outcome of the Supreme Court judgment, we have engaged with the stakeholders, including GUVNL, for possible remedial measures for long-term sustainability of the Mundra plant and various options are being explored,” the spokesperson said adding that it would be premature to comment on the likely sale of stake in the plant at the moment.

The Supreme Court, in April, denied Adani Power and Tata Power the right to charge compensatory tariff for their power plants due to higher international coal prices following changes in Indonesian regulation, setting aside an earlier decision of the Central Appellate Tribunal for Electricity.

This not only impacted the overall performance of the companies, but made the operations of their power plants, as per existing power purchase agreements, financially unviable.

Both Adani Power and Tata Power have discontinued supply of power to GUVNL. Essar Power Gujarat Ltd (EPGL), too, has cut supply citing similar reasons.

Adani Power recently reported a consolidated net loss of ₹4,960 crore in Q4 of FY17 compared to a net profit of ₹1,085 crore in Q4 of FY16, while the total income for the quarter fell 15 per cent to ₹6,587 crore in FY17 as against ₹7,757 crore in the previous year.

(With inputs from Twesh Mishra in New Delhi)

Published on January 12, 2018

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