WHAT IS ASSET MONETISATION?

The Department of Investment and Public Asset Management (DIPAM) defines asset monetisation as the creation of new revenue sources by unlocking the value of hitherto unutilised or underutilised public assets. DIPAM has defined five ways of monetisation:

▶ Direct contractual approach

This has been adopted by the National Highways Authority of India in toll-operate-transfer model, which involves bundling projects and giving them out to private entities that maintain and operate roads that have been constructed. The NHAI gets an upfront fee in return. While taking away the responsibility of maintaining and toll collection, this model assures that completed projects are monetised to raise resources for constructing other roads. Besides upfront payment, DIPAM says annual payments could also be taken.

▶ Structured finance

This involves securitisation of assets for raising bonds or placing them under trusts created under Sebi-specified guidelines for infrastructure investment trusts and real estate investment trusts (REITS). Debt on these assets is transferred to the special purpose vehicles holding the trusts. Revenue from operational assets go to the trust, which issues dividends to investors with a stake in the trusts.

▶ Land monetisation

This involves selling or leasing land parcels besides placing them in REITS.

▶ Sick PSU assets

The Department of Public Enterprises has issued guidelines for this. Union governmentowned NBCC may be nominated the land management agency.