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Total to buy 50% stake in Adani solar unit for $510 million

FE Bureau
Adani solar unit, Adani Green Energy, Qatar, LNG in India, Adani Group,  solar plants

Adani Green Energy (AGEL) said on Thursday that Total SA has signed a binding agreement wherein the French energy giant will invest $510 million to acquire 50% stake in the upcoming unit which will house AGEL's 2,148 megawatt (MW) of currently operational solar projects. The acquisition is part of Total's target of building a portfolio of low-carbon businesses that could account for 15% to 20% of its sales by 2040. Under a separate deal, the two firms will also build an 800-MW solar power plant in Qatar.

The average tariff of AGEL's operational solar plants is Rs4.82/unit and has a capex to Ebitda ratio of 6.04. None of the solar projects under this deal sell power to Andhra Pradesh, which has decided to re-open power purchase agreements to reduce tariff. AGEL's another 3,495-MW under-construction renewable energy capacity, which remains outside the Total deal, will sell power at Rs2.80/unit on an average.

In October 2019, Total and Adani had agreed to form another 50/50 partnership in the country which would include several assets across the gas value chain and imports and regasification liquefied natural gas (LNG) terminals, including Dhamra in Odisha. Total would also takeover 37.4% stake in Adani Gas. The two companies also plan to establish a joint venture to market LNG in India and Bangladesh and set up a retail network of 1,500 fuel service stations over the period of 10 years.

Losses of AGEL, the renewable energy unit of the Adani Group, increased 8.3% year-on-year (y-o-y) to Rs128.5 crore in the quarter ended December 31 as the company earned less from electricity sales, paid more interests and spent more on employees. However, its solar assets sold 4.2% more electricity in the quarter as operational capacity increased 13.2% y-o-y to 2,148 MW at the end of Q3FY20. At the end of the quarter, AGEL's consolidated debt stood at Rs13,451 crore, for which it pays an average interest rate of 10.75%.