Pan
Global’s strategy is to build sustainable infrastructure, including
regionally-targeted, low environmental impact small hydro projects, as well as
other high ROI ventures in Asia’s third-largest economy, India. The company is
well-positioned to succeed alongside the country’s mounting GDP, which grew at
5.7% during the June quarter. This is the strongest pace of GDP growth for
India in two and a half years and is up 1.7% from the March quarter, driven
largely by strong industrial activity.
While
Izumi Devalier, an economist for HSBC in Hong Kong, chalked up most of the GDP
jump to front-loading of government expenditure in a recent statement,
economists at Citi argued India is on its way back to as much as 7% growth with
6% inflation and that it is just a matter of if, not when. Irrespective of who
is right in such a debate, the policy initiatives set by Prime Minister
Narendra Modi’s government regarding small hydro are clearly positive for PGLO,
with Modi dedicating a 240MW hydro project in the northern Jammu & Kashmir
state in July, followed up by two more dedications last month (44MW and 45MW
respectively). This is considerable development activity considering the
difficult terrain and location of the latest dedications being some 10.5k feet
above sea level in the Ladakh border region, which sits between the Himalayas
and the Kunlun mountain range further north. PM Modi even asserted at the
latest hydro project dedication that his government would strive to make Jammu
& Kashmir the “energy state of the country,” offering investors a clear
signal as to the future of such hydro development in northern India.
A
recent report on the Indian hydropower market by MarketReportsOnIndia.com,
looking at the sector through 2025, predicts a very bullish trend moving
forward and, given the recent World Bank announcement that they will only fund
ecologically safe hydro projects in India, the market is wide open for
precisely the sort of projects PGLO is looking to do. Projects like the 5.7MW
small-hydro plant in Uttarakhand (Project Badyar) which was connected to the
grid in July and which PGLO is acquiring through a staggered acquisition
(currently 9.93% of outstanding equity held) of the privately-held Indian
corporation that is commissioning the plant, Regency Yamuna Energy.
The
Uttarakhand government is currently in the process of working on a its recently
announced (September 4) power policy overhaul, which focuses heavily on small
hydro project development in the 2MW to 25MW range. The stars seem to be
aligning for environmentally safe and sound technologies in the small scale
hydroelectric power sector in India and PGLO is at the forefront with efforts
like Project Badyar, which is currently in testing, certification and other
activities associated with commercial operation. Harnessing hydro power on a
small scale allows for minimally invasive tapping of river currents and also
helps enable cost-effective infrastructural development, even at high altitudes
in India’s remote or poorer regions, where larger projects would be
logistically ponderous for a variety of reasons.
World
Bank estimates indicate that as many as 79 million households in India still
have no access to electricity and small-hydro. With its ability to be deployed
in remote regions where larger projects, or other types of projects simply
aren’t anywhere near as feasible, small-hydro could bring millions into the
ligh, as PGLO and other players develop the massive remaining amounts of hydro
potential across the country. India currently imports somewhere around 28% of
its net energy consumption as well, so this overall trend toward developing
distributed hydro must be seen in the light of achieving energy independence as
well. This is a subject that the Modi government has been driving hard at since
even before the 2012 blackouts, which put as many as 600 million people’s
lights out for days and helped put Modi into office.
The
specter of grid overload in India, so profoundly represented by the 2012
blackouts, was just conjured up again this week on Tuesday (September 3), with
rolling power outages bringing most of Mumbai (around 12.5 million people) to a
standstill for the better part of the day, when the primary supplier, Tata
Power’s plant in Trombay, had its 500MW unit 5 station trip, causing a domino
effect. This latest incident throws a bright spotlight on how difficult it is
to solve the problems facing India’s electrical grid and makes a strong case
for a less-centralized, more localized/distributed solution, where consumers
and businesses are not reliant on a handful of large, often distant providers.
Small hydro is going to be a huge variable when it comes to solving the problem
of India’s seemingly ravenous hunger for more electricity, driven not just by
steady GDP growth, but by a growing population where the birthrate remains at
around 2.6 births per woman.
India
is still growing at a healthy clip and has clearly put hydroelectric on the
front burner legislatively, creating is tremendous potential upside for a small
company like PGLO, which is also developing sustainable agriculture projects to
feed the growing population high quality organic produce while simultaneously
addressing increasingly worrisome water shortage issues. PGLO is also pursuing
geothermal and solar PV, as well as environmentally sustainable green buildings
using LEED guidelines.
For
more information, visit: www.PanGlobalCorp.com
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