GAIL, RVUNL to form JV to bundle existing gas-based power assets with RE projects

New Delhi: GAIL (India) Limited and Rajasthan Rajya Vidyut Utpadan Nigam Limited (RVUNL) have signed a joint venture agreement to transfer two existing gas-based power plants and develop nearly 1,000 MW of Renewable Energy (RE) capacity in Rajasthan to bundle gas-based power with clean energy, the company informed the bourses in a regulatory filing on Tuesday.

PSU Watch is now on Whatsapp Channels. Click here to join

The agreement, executed on July 29, paves the way for the transfer of RVUNL’s 330 MW gas-based power plant in Dholpur and the 270.5 MW plant in Ramgarh to a new joint venture company (JVC), pending a successful due diligence exercise by GAIL. The JVC will also build around 750 MW of solar power and 250 MW of wind capacity, to complement and bundle with output from the gas plants.

GAIL and RVUNL will each hold a 50 percent stake in the JVC.

Hybrid generation model to ensure flexible, cleaner power

The bundling of renewable energy with gas-based generation is aimed at creating a more flexible, dispatchable power supply mix. This aligns with both the companies' efforts to support India’s energy transition while maintaining grid stability through firm capacity.

Following a satisfactory outcome of the due diligence, RVUNL will incorporate a wholly owned subsidiary which will become the JVC after GAIL’s investment. The asset transfer will take place through a separate agreement, after which GAIL will subscribe to or purchase shares in the entity.

JV governance and structure

The JVC will be equally owned, with an initial authorised and paid-up share capital of Rs 10 lakh. The board will comprise six directors — three nominated by each partner. Both parties will have the right of first refusal in case of equity transfers, and a five-year lock-in period will apply from the JVC’s incorporation.

While shares will be issued at the time of equity infusion, no pricing has been disclosed yet. The agreement confirms that this is not a related party transaction, and there are no conflicts of interest between the parties.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)