Even as the Narendra Modi led government launched the Saubhagya scheme on Monday to add more ‘power’ to Indian infrastructure and economy, global research and brokerage firm CLSA remains defensive on the utilities sector, as it believes the implementation of the scheme remains a challenge.
CLSA has retained a sell call on Adani Power and Adani Transmission Ltd, as the firm believes that India doesn’t have a viable business model for power distribution companies in India. Adani Power Ltd was trading at Rs 30.45 on Tuesday morning, down by nearly 1%. Adani Transmission shares surged 4% in the opening trade to Rs 132.8, this morning on NSE. In case of NTPC and Power Grid, the firm has a buy call. NTPC shares were trading down by nearly 0.25% at Rs 165.85 on NSE. Power Grid shares were trading at Rs 210, up by more than 0.3% from the previous close. CLSA says that the execution of the scheme will need a lot of political will.
Prime Minister Narendra Modi on Monday gave a big push to an ongoing mission to get all households in the country electrified by launching a Rs 16,320-crore scheme — Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya) — to achieve the coveted goal by the end of December 2018. Of the total cost of Saubhagya, Rs 12,320 crore will be in the form of the Centre’s budget support; Rs 14,025 crore will be used for electrification of rural households — 1.5 crore such households have already been electrified under the Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) — while Rs 2,295 crore will be allotted for urban homes.
Lamenting that 4 crore or 20% of the country’s household are without electricity 70 years after Independence, Narendra Modi said that his government was determined to provide 24×7 reliable-quality power to the entire population. Kameswara Rao, leader, energy, utilities and mining, PwC India, said yesterday “The last-mile connectivity has always been a challenge, with households facing high connections costs, and states facing higher supply costs. So, this attempt to address both, by funding energy efficient equipment, is a positive step.” Under Saubhagya, households living in remote areas without access to a power transmission grid would receive solar power packs with five LED lights, one fan, and one plug point with five years of repair and maintenance service.