(ET)
Adani Group is exploring acquisition of Vidarbha Industries Power (VIPL), a subsidiary of Reliance Power which supplies electricity to Adani Electricity Mumbai, two people aware of the development said. The talks between billionaire Gautam Adani-led group and Anil Ambani-led Reliance Power are at an early stage, the persons cited earlier told ET. Both groups declined to comment on the matter.
VIPL operates two 300 megawatt (MW) units at Butibori in Maharashtra, but it has not been generating any power since mid-January after Coal India stopped supplying coal over an ongoing litigation which is in the Delhi High Court and issues relating to payment. VIPL had shut its first unit of 300 MW before that. The spat has forced Adani Electricity to buy power from the open market to meet its obligation to its 3 million customers in the city.
“The acquisition cannot happen with the current power purchase agreement because the tariff is very high. Adani Electricity can easily source electricity from open market at Rs 4/unit or lower. So then why should it pay Rs 5.50/unit to VIPL,” a senior executive told ET. According to the executive, Adani has been procuring power from the market at Rs 3.50-4/unit. In comparison, VIPL was charging it Rs 4.38/unit, which could go up to Rs 5.50 if it is allowed to pass on the entire cost of coal procurem
