Centre to monetise rail assets via InvIT
NEW DELHI: After tasting success with infrastructure investment trusts (InvITs) in power and road sectors, the government plans to replicate the model for asset monetisation in the railways, aiming to draw private investments in several operating areas.
According to two people in the know, the plan is to launch a Railway InvIT as a special purpose vehicle that will park operational assets such as goods sheds, track signalling and overhead equipment (Track OHE), rail tracks of Dedicated Freight Corridor Corp. (DDFC) where track access charge is proposed to be levied, certain railway stations, city-side rail infrastructure development projects involving building hotels, shopping centres and entertainment hubs.
There may be a single InVIT holding all these assets, or several ones with smaller chunks, the people cited above said on condition of anonymity. “The best case is to have specific InvITs. So, the plan is to look at a track signalling and overhead equipment (Track OHE) InvIT anchored by DDFC; another InvIT could have railway goods depot and warehousing facilities,” one of the two people said.
Queries sent to Indian Railways remained unanswered till press time. InVITs work like mutual funds, where investors buy units in trusts that are listed on the exchanges; these units fetch a regular income stream, plus dividend payments. Through InvITs, investors get to invest in lucrative, operational rail projects upfront and earn returns for 15-20 years.
For the railways, it would help in getting upfront money for investments made in building these assets. The National Highways Authority of India and Power Grid Corp. of India already have functioning InvITs, which have allowed them to monetize assets. The people cited earlier said the prospect of InvITs has been discussed between the Railways and NITI Aayog earlier, and the national transporter has now asked all its PSUs to come up with specific proposals with a clear plan on assets that could be parked in such trusts.
Once the inputs are available, Indian Railways may go ahead with the InVIT plan. Though the actual amount and size of the InvIT are still to be worked out, it could make a modest beginning of ₹2,500-3,000 crore, and later more assets could be parked into it for monetization.
The structure is expected to be finalised before the year end, officials said. The National Monetisation Pipeline has set a target of raising ₹6 lakh crore through asset monetisation in FY22-25, with the FY23 target set at ₹1.67 lakh crore. Of the ₹6 lakh crore target, the share of railways accounts for ₹1.52 lakh crore, the second-highest after roads (₹1.60 lakh crore).