Why the new budget makes hydropower sector euphoric

ShareSansar, July 16:

The budget for the fiscal year 2071/72 has come as a pleasant surprise for the stakeholders in the hydropower sector of the country. They are also euphoric about the way the government has pledged to promote the sector, which is not just crucial for the economic development, but also for the promotion of the stock market.

In this context, ShareSansar talked to the movers and shakers of the market to understand how will the budget impact the stock market in days to come.

Noted share investor Tulsi Ram Dhakal thinks that the new budget for the fiscal year 2072/ 73 is very positive for the stock market, especially when it comes to the hydropower projects.

“As far as the hydropower sector is concerned the budget seems very positive as it has provided a lot of facilities, like the budget promised to provide Rs 50 lakh subsidy per mega watt for hydropower development that will generate power by 2017/18,” says Dhakal, who is also the public director of Chilime Hydropower Company Limited.

“Likewise, the hydropower company that will generate electricity till 2022/23 will get 100 percent tax waiver for ten years and additional 50 percent discount on tax for another five years,” he added. “  In addition to that there is enough allocation of budget for the transmission line and a pledge to set up a different division under the NEA to look after the transmission. These things will go a long way to promote the sector.”

Chilime alone is expected to save around Rs 1.48 arba in tax waiver and subsidies in the four upcoming projects – thanks to the new budget, he adds.

Chief Executive Officer of Nabil Investment Banking Limited Pravin Raman Parajuli says though it’s too early to say how the budget would impact the capital market, he says that the budget seems good not just for the hydropower sector but for entire infrastructure sector.  

“Moreover with all the facility pledged to the hydropower projects, the sector stands to benefit in the longer run though the short-run gains may not be immediately visible,” adds Parajuli of Nabil Invest, which is also one of the mutual fund operators.  

Stock analyst Rabindra Bhattrai says that though the new budget is not as favor for the capital market as it was expected to be, it has come up with policies and programs that will definitely benefit the infrastructure development, especially hydropower generation.

“But we have to see how effectively the government can implement it,” he adds.

Eminent industrialist and stock investor Gyanendra Lal Pradhan says that the leaders of the share market should be held more responsible for the failure of the budget to bring in more programs to promote the market rather than the government itself as there was no coordination and unity among the market leaders in the run up to the budget.

However, Pradhan, too, agrees that the budget has given a lot of incentives for the development of hydropower in the country.

But he is quick to add that there is too much excitement than required in the market regarding the hydropower scrips, which is not a good thing.

He wants to suggest new investors that in the current scenario the hydropower sector is already bit risky with the extensive rise in the scrip price.

“So it’s better to wait for the upcoming IPOs of hydropower companies than go for the scrips available in the secondary market at this juncture,” he says.