Reliance Infrastructure Ltd (RInfra) has entered into exclusive negotiations with Adani Transmission Ltd for the potential sale of Reliance Infra’s power business in Mumbai, spanning generation, transmission and distribution.
Both firms have entered into a period of exclusivity till January 15, 2018, but the proposed transaction is subject to confirmatory diligence, definitive documentation and customary approvals.
RInfra has been distributing electricity in Mumbai for over eight decades. Every 2 out of 3 homes in Mumbai are being energized by the company using a network consists of more than 20,000 km of HT and LT underground cables and more than 6,300 substations of 11/0.4kV rating. The network experienced a peak demand requirement of 1,884 mw last summer season. The total consumer base in the Mumbai region is around 3 million, and RInfra’s power distribution licence is valid up to August 2036.
If deal goes through, Adani Group will be entering the power distribution business. For RInfra, it will still not mean a complete exit from the power distribution activity, as it is a power distribution licencee in Delhi, through BSES Yamuna Power Ltd and BSES Rajdhani Ltd. Both these companies are joint ventures between Reliance Infrastructure and the Government of NCT of Delhi.
Other contenders: It may be recalled that earlier this year, Greenko—a renewable energy company in which Singapore’s GIC and Abu Dhabi Investment Authority (ADIA) are main shareholders—was also eyeing Reliance Infrastructure’s Mumbai power distribution business.
RInfra was also in talks with Public Sector Pension Investment Board (PSP Investments), one of Canada’s largest pension funds, to sell 49 per cent equity stake in the Mumbai power distribution business.
Power transmission
The exclusive negotiations with Adani Transmission follow a similar agreement between the two companies with respect to Reliance Infrastructure’s power transmission business.
RInfra and Adani Transmission recently signed a binding termsheet agreement for RInfra’s three operational transmission projects, namely WRSSS-B, WRSSS-C and Parbati Koldam Transmission Company Ltd (PKTCL). WRSS (Western Region System Strengthening Scheme) spans states like Maharashtra, Gujarat, Madhya Pradesh and Karnataka. Parbati Koldam Transmission Company is a 74:26 joint venture between Reliance Infrastructure and Power Grid Corporation of India Ltd. Under this transaction, Adani Transmission would acquire 100 per cent ownership in WRSSS B & C and 74 per cent ownership in PKTCL.
(Photo: A compact IoT-enabled substation of RInfra in Mumbai. The Mumbai power distribution business of RInfra is known as “Reliance Energy”)
