Adani Power Ltd on Tuesday said the Board of Approval (BoA) for Special Economic Zones (SEZs) has deferred the firm’s proposal to transfer its Mundra power plant to its subsidiary Adani Power (Mundra) Ltd.
The power project falls in the 8,481-hectare SEZ developed by the Adani group. BoA approval is mandatory to make the demerger effective, a company spokesperson said.
“In its meeting on 3 July, BoA decided to defer the proposal of approving the demerger, until no-objection certificate (NOC) is received from banks. We have approached the lenders and once an approval is granted, we will take the process forward as required. The NOC from the banks would be taken through a meeting conveyed as per directions of National Company Law Tribunal (NCLT),” the spokesperson added.
BoA for SEZ comes under the Union commerce ministry.
Adani Power has offered to sell 51% in the Mundra unit to Gujarat Urja Vikas Nigam Ltd (GUVNL) for a token Re1. The company has signed power purchase agreements to supply 2,000MW of power to GUVNL—the state-owned power distributor.
Plans to sell stake in the 4620MW power project follows a recent Supreme Court order which disallowed compensatory tariff for the plant.
Following the order, Adani Power had to write off about Rs3,620 in the quarter ended in March 2017. It posted a net loss of Rs4,960.53 crore for the fourth quarter to March, against a profit of Rs1,012.19 crore in the corresponding quarter of the previous year.
In May, the firm trimmed supplies to GUVNL citing financial unviability of the project and discontinued 1,250MW of power supply in a phased manner, a state government official aware of the matter said on condition of anonymity.
On 7 June, Adani Power said in a BSE filing the company’ board had approved the slump sale of the Mundra plant to its subsidiary Adani Power (Mundra) Ltd. This was done in an attempt to attract funding in the separated entity for capacity expansion. The transaction “will put Mundra undertaking at par with the other operating subsidiaries of the company, with specific strategic focus as well as specific financial arrangements”, according to the statement.
Adani Power has been supplying bulk power to GUVNL in Gujarat and has signed long term PPAs in this regard.