Gujarat Government May Acquire Majority Stake In Adani’s Mundra Power Plant

The board of Adani Power Ltd. will meet on Tuesday to consider hiving off its flagship Mundra power station to a new subsidiary in which a Gujarat government entity may take a majority stake.

"A meeting of the board of directors of the company is scheduled to be held on June 6, 2017 to consider and evaluate, among others, the slump sale of its Mundra power generating business undertaking to its subsidiary company, named Adani Power (Mundra) Ltd.," the company said in a regulatory filing.

Industry sources said Gujarat Urja Vikas Nigam Ltd. (GUVNL) - the Gujarat government entity - which buys majority of the 4,260 MW electricity generated at Mundra - may take 51 percent stake in the new subsidiary.

A company spokesperson termed it as "premature" to comment on likely sale of stake in the plant to GUVNL.

Adani Power, the spokesperson said, has total thermal power generation capacity of 10,440 MW. It directly owns and operates the 4,620 MW power plant at Mundra, and 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, respectively.

"Now, as part of a restructuring exercise, Adani Power 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," the spokesperson said.

He added that following the recent the Supreme Court judgement, the company is "engaged with the stakeholders including GUVNL for possible remedial measures for long term sustainability of the Mundra Plant and various options are being explored presently."

Last month, Adani Power had discontinued 1,250 MW power supply to GUVNL in a phased manner, mainly due to the unviability of running its power plant at Mundra on imported coal.

Of 2,000 MW power provided by Adani Power to GUVNL under different power purchase agreements (PPAs), 1,250 MW supply was discontinued.

Sources said the company had told the state government that operating Mundra power plant at the tariff specified in the PPA using imported coal (from Indonesia) was unviable after the Supreme Court disallowed raising power tariffs to compensate for rise in price of coal from Indonesia.

Adani Power had entered into a long-term PPA with GUVNL in 2007 for supply of 1,000 MW of electricity at a levelised tariff of Rs 2.35 per unit for a period of 25 years. More supplies were contracted under PPAs signed at different times. It also contracted to sell 1,424 MW of power to Haryana.

Mundra plant has a capacity of 4,620 MW, comprising of four units of 330 MW each and 5 units of 660 MW each. The 330 MW units are based on subcritical technology and the 660 MW units are based on supercritical technology.

Power from the plant is evacuated by two transmission lines - a 433 km, 400 KV transmission line to transmit 1,000 MW from Mundra to Dehegam in Gujarat and another 989 km, 500 KV high Voltage Direct current (HVDC) bipole line with the capacity to transmit 2,500 MW from Mundra to Mohindergarh in Haryana.