Maharashtra Electricity Regulatory Commission (MERC) on Thursday gave its approval to the proposed 100 per cent stake sale of Reliance Infrastructure's integrated Mumbai power business to Adani Transmission (ATL). The transaction is expected to be closed in July. The total consideration value of the deal is estimated at Rs 18,800 crore.
For Adani Transmission, this will pave the way for its entry into the power distribution business and access to the Mumbai distribution circle with a consumer base of 3 million, making it an electrifying player in India's private power distribution space. It will soon power all of suburban Mumbai.
ATL will now have to compete with the existing players including Tata Power, BrihanMumbai Electric Supply & Transport (BEST) and the Maharashtra State Electricity Distribution Company (MahaVitaran) to increase its consumer base in the city distribution segment.
MERC had concluded its hearing into the matter and reserved its order on June 14, 2018. Reliance Infrastructure has already received the approval of Competition Commission of India (CCI) and its share-holders for the deal. Reliance Infrastructure and ATL had signed the Definitive Binding Agreement for 100 per cent stake sale of the integrated business of generation, transmission and distribution of power for Mumbai in December 2017.
Reliance Infrastructure spokesman said the company will utilize the proceeds of this sale to clear debt, and could have up to Rs 3,000 crore cash surplus.
"ATL's entry will enhance competition in Mumbai," MERC's former member Jayant Deo says, "Adanis have their own generating sources with cheaper fuel, so Mumbaikars can expect lower tariff."
Ashok Pendse, a consumer representative at the MERC, says Mumbaikars should insist that Adani get cheaper power from its generation basket. "Though Adanis have experience in generation and transmission, they have never ventured into power distribution. This will be a test case for Adanis to see how they fulfil expectations of three million consumers," he noted.
MERC clarified that there will be no adverse tariff impact on account of the transaction. Tariff will continue to be determined on the basis of regulated books of accounts. The distribution licence will be valid till August 15, 2036.
