“Its a commercial agreement and it is as per regulations...do not read anything more into the transaction,” a senior official at Reliance Industries told businessline on the Mukesh Ambani-controlled conglomerate buying a 26 per cent stake in Adani Power’s thermal power arm Mahan Energen.

‘No choice ‘

The company had no choice other than to tie up a power purchase agreement with the Adani group for its power requirement, as it is the only group that has the capacity to readily provide it with its requirement of 500 MW, sources said.

This is being seen as a significant development in corporate circles as it brings together two large conglomerates, owned by two high profile corporate titans.

Both are investing heavily in the renewable energy sector and have massive giga complexes coming up in Gujarat. This includes not only wind and solar energies but also green hydrogen where both are setting up comprehensive ecosystems right from electrolysers to green ammonia.

RIL said that it has agreed to pick up a 26 per cent stake in one unit of Mahan Energen of 600 MW capacity, for its captive power use. The companies have entered into a 20-year long-term power purchase agreement for this purpose.

Under the terms of the agreement, RIL will subscribe to five crore equity shares of Mahan Energen for ₹50 crore. As a captive user RIL is required to own 26 per cent proportionate ownership in the Adani Power arm which is engaged in generation and supply of thermal power.

Mahan Energen currently has a capacity to generate 1200 MW of super critical power which will be expanded to 2800 MW in the next few years. It reported a revenue of ₹2731 crore in FY23, up from the ₹1393.6 crore it posted in FY22.