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Adani Power Eyes Butibori Thermal Plant in Rs 3,000 Crore Acquisition Deal

Adani Power accelerates growth plans by acquiring Reliance Power’s Butibori plant, aiming to capitalize on India’s rising electricity consumption.

Acquisition talks intensify as Adani Power eyes takeover of Butibori plant

Adani Power, India’s largest private sector thermal power producer, has entered advanced negotiations to acquire the 600 MW Butibori thermal power project, once operated by Reliance Power. The transaction’s valuation is projected between ₹2,400 crore and ₹3,000 crore, translating to roughly ₹4–₹5 crore for each megawatt of capacity. This strategic acquisition reflects Adani’s intent to tap into the rising demand for dependable electricity across India.

Reliance Power’s Insolvent Asset Up for Sale

Butibori Thermal Power Plant, based in Nagpur, is currently controlled by Vidarbha Industries Power Limited, a Reliance Power subsidiary. Financial distress forced the plant into non-operational status, making it a candidate for acquisition. CFM Asset Reconstruction Company (CFM ARC) is presently the sole creditor of the project, having purchased outstanding loans worth ₹1,265 crore. Adani Group plans to fully finance the acquisition using its own generated funds, reflecting the conglomerate’s robust financial position.

Originally, the Butibori facility, with two operational units, carried an estimated valuation of ₹6,000 crore. However, production has been halted due to operational and financial hurdles, reducing its current valuation substantially. For Adani Power, this offers a strategic bargain, aligning perfectly with its broader vision of strengthening its thermal power portfolio.

Previous Suitors and Changing Dynamics

Interestingly, JSW Energy had earlier expressed interest in acquiring the Butibori facility but eventually backed out, citing valuation and operational complexities. Reliance Power had previously utilized Butibori’s generation capacity for power distribution in Mumbai before that business was taken over by Adani Electricity Mumbai Ltd. The lapse of the power purchase agreement between Vidarbha and Adani in December 2019 plunged the facility deeper into financial troubles, leading to insolvency proceedings.

Why the Acquisition Makes Strategic Sense

This acquisition attempt comes at a time when India is witnessing a surge in peak power consumption. In recent presentations, the Adani Group emphasized that an increase in thermal power capacity is necessary to meet this burgeoning demand.

The strategic advantage for Adani Power lies in its proximity. Adani’s 3.3 GW supercritical coal-fired facility at Tiroda sits approximately 125 kilometers away from Nagpur. By integrating Butibori with its Tiroda facility, Adani could significantly enhance operational efficiencies and reduce logistics costs. The proximity allows potential synergy between the plants, streamlining coal supplies and grid connectivity.

Moreover, with Maharashtra holding a long-term Power Purchase Agreement (PPA) for 3,085 MW, this acquisition positions Adani to potentially capitalize on untapped capacity and future expansions.

Sector-Wide Implications of the Deal

Adani’s interest in acquiring the Butibori project marks a significant step toward consolidating its position in India’s thermal power sector. While much of the industry is currently pivoting towards renewable energy, thermal power remains indispensable for stabilizing base load requirements. Given recurring coal shortages in India and seasonal fluctuations in renewable generation, this acquisition could provide a critical advantage.

The Butibori project’s revival would not only improve Adani’s generation capacity but also enhance its bargaining position in Maharashtra’s competitive electricity market. This might create ripple effects for competing players like Tata Power and the Maharashtra State Electricity Distribution Company (MSEDCL).

Financing the Acquisition

Adani Group plans to finance the Butibori acquisition solely through its internal reserves, highlighting both its financial resilience and strategic focus on energy expansion.

Additionally, securing this asset at a relatively discounted price — due to halted production and bankruptcy distress — fits well into Adani’s larger strategy of acquiring stressed assets and turning them around profitably.

Final Thoughts

Adani Power’s ongoing negotiations for the Butibori thermal plant acquisition reflect a calculated expansion plan designed to capitalize on India’s escalating electricity demand. By potentially acquiring this distressed but strategically located facility, Adani not only boosts its overall generation capacity but also prepares for long-term competitive advantage in Maharashtra’s power sector.

While regulatory clearances and final shareholder approvals will shape the pace of execution, this move signifies Adani’s intent to dominate both regional and national power markets. If successful, the integration of Butibori with Adani’s existing infrastructure could turn a distressed asset into a revenue-generating powerhouse in the coming years.

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