Adani Power Ltd has entered into discussions to acquire the 600 MW Butibori thermal power project in Nagpur, previously owned by the now-insolvent Reliance Power Ltd, part of Anil Ambani’s business empire. The deal, valued between Rs 2,400 crore and Rs 3,000 crore, reflects Adani Power’s strategic move to strengthen its position as India’s leading private thermal power producer.
Deal Valuation and Strategic Fit
The Butibori plant, operated by Vidarbha Industries Power Ltd, was initially valued at around Rs 6,000 crore. However, due to the current halt in power generation, the valuation has significantly decreased. Adani Power is negotiating with CFM Asset Reconstruction Co, the sole creditor of the project, to finalize the acquisition. The expected deal price translates to approximately Rs 4 crore to Rs 5 crore per MW, a rate that underscores the plant’s non-operational status and the ongoing coal shortage affecting the region.
An official involved in the negotiations noted that the Butibori project aligns well with Adani’s overall strategy, as it complements the group’s existing thermal power infrastructure. Specifically, the integration of Butibori with Adani’s coal-fired power plant in Tiroda, located near Nagpur, is a key part of the group’s plan to resume power generation and supply electricity to Mumbai and surrounding areas.
Impact on Adani’s Expansion Plans
The acquisition of the Butibori plant is part of Adani Group’s broader strategy to expand its thermal power capacity amid rising peak power demand in India. Despite the global shift towards renewable energy, reliable thermal power remains critical for meeting India’s energy needs. The Butibori plant, once operational, will enhance Adani’s competitive edge against other major players in the region, such as Tata Power and MSEDCL.
The strategic acquisition comes at a time when JSW Energy Ltd, another major player in the energy sector, had expressed initial interest in the Butibori project but later withdrew due to valuation concerns and operational challenges. This leaves Adani Power in a favorable position to capitalize on the opportunity.
Challenges and Future Prospects
While the acquisition appears strategically sound, Adani Power faces several challenges in bringing the Butibori plant back online. The ongoing coal shortage in the region has rendered both units non-operational, significantly lowering the plant’s valuation. However, if the acquisition proceeds as planned, Adani Power intends to connect the Butibori plant with its Tiroda facility, potentially revitalizing power production and contributing to the stability of the electricity supply in Maharashtra.
Furthermore, the long-term Power Purchase Agreement (PPA) with the Maharashtra state for 3085 MW provides a solid foundation for future expansion. If successful, this acquisition could mark a significant milestone in Adani Power’s ongoing efforts to expand its thermal power portfolio and secure its position in India’s energy market.
The acquisition of the Butibori thermal power project by Adani Power represents a calculated move to bolster its thermal power capacity amidst rising energy demand and ongoing operational challenges. With a strategic plan to integrate the Butibori plant with its existing infrastructure, Adani Power is poised to enhance its competitive positioning in India’s energy sector.
(With inputs from agencies)
