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Pan Global Corp. (PGLO) Poised for Profit as India Focuses on Hydroelectric Generation under Modi

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

Let us hear your thoughts below: Pan Global Corp. Message Board

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