After
rejecting the 3k MW Dibang hydro plant two months prior, which would be the
biggest hydro plant in all of India, the country’s environment ministry has now
subsequently approved the project under considerable pressure from Prime
Minister Narendra Modi’s office, shocking some diehard environmental groups.
Yet Modi steamrollered Manmohan Singh out of office partially on a pledge to
bring the some 400M Indians estimated by the World Bank to still be without
power into the modern age, via a raft of energy infrastructure development,
with a particular focus on hydro and small-hydro.
In keeping
with the obvious push to ramp up electrical production throughout the country,
the national government has also devolved much of the remaining decision making
in this area to state governments themselves; state governments which generally
show an even greater appetite to build out their infrastructure and turn the
lights on in millions of (largely rural) Indian homes. Witness the Himachal
Pradesh (just south of Jammu & Kashmir, slated to become India’s top
power-producing state, in the remote northeast, and to the northwest of
Uttarakhand and the nation of Nepal) state government’s recent decision to
waive mandatory clearance for hydro-power projects and you get a strong sense
of where the country wants to head and how eagerly in terms of rolling out
hydro to meet the demand of India’s still-growing population they really are.
The UN
report from last year on India’s population growth even indicated that while
China would start to decline by 2028, India would still be growing strong and
is on-track to become the planet’s most populous nation in under a decade and a
half. In neighboring Nepal (adjacent to Uttarakhand from the southeast), the
national government has just signed an agreement with India’s GMR Group to put
in the approximately $1.15B, 900 MW Upper Karnali Hydropower plant, which will
be the biggest hydroelectric plant in Nepal and from which most of the power
would be exported to the ravenous Indian energy market (12% would go to Nepal
free of charge and they get a 27% stake). Modi was even in Nepal last month
touting hydro development and pledged not only to help accelerate such
development, but also pledged some $1B in concessional development loans toward
this end. A welcome initiative from India, as Nepal also has crippling energy
problems.
No one in
the region wants to revisit the 2012 India blackouts scenario that left
600M-plus without power for days and exposed serious systemic flaws in the
energy grid. With the northeastern Indian state of Arunachal’s sizeable town of
Ziro experiencing recent outages that basically shut down the 83k-citizen
encompassing district this August, alongside Nepal’s notoriously bad power
stoppages of up to 12 hours a day some days, it looks like the Himalayan
foothills are destined to become a regional energy powerhouse.
This is a
perfect storm of preconditions for the relatively small sustainable
infrastructure-focused company Pan Global Corp. (PGLO), which makes them able
to continue pursuing the increasingly dominant, small-hydro portion of their
portfolio with zeal. The company’s continued success in this area was recently
characterized by the successful grid connection in July of their 5.7MW
small-hydro plant in Uttarakhand (Project Badyar). Project Badyar also
exemplifies PGLO’s shrewd staggered acquisition strategy, here targeting
privately-held Indian corporation Regency Yamuna (currently 9.93% of
outstanding equity via PGLO’s wholly-owned Pan Asia Infratech subsidiary), who
commissioned the plant.
The report
update released in June by GlobalData (Hydropower in India, Market Outlook to
2025, Update 2014), continues to show a strong growth trend moving forward for
India’s hydro sector. The recent news clearly telegraphing a more lax attitude
towards environmentally regulating energy development by the Indian government
should give investors a clear portrait of the country’s yet largely untapped
hydro landscape. This is an ideal environment for players like PGLO, which maintains
a decidedly environmentally conscious approach to the bottom line, giving local
governments a “feel good” choice that will resonate with consumers on both
sides of the debate.
For more
information, visit www.PanGlobalCorp.com
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