FM unveils ~6-trn plan to monetise assets

Ownership will remain with govt, says Sitharaman

Finance Minister Nirmala Sitharaman on Monday announced a pipeline of assets the government is looking to monetise to collect about ~6 trillion to partly fund its ambitious infrastructure projects over four years ending 2024-25. About ~88,000 crore will be realised through asset monetisation in the current financial year.

Sitharaman, however, clarified that the ownership of all these assets would remain with the government, and there would be a mandatory hand-back of assets after a certain time period. “So, the government is not selling away these assets,” she said.

The National Monetisation Pipeline (NMP) will constitute 14 per cent of the Centre’s share of ~43.29 trillion in the National Infrastructure Pipeline (NIP). Global players such as Blackstone, Blackrock, and Macquarie have shown interest in participating in the monetisation process.

The plan covers 20 asset classes spread over 12 line ministries and departments. The top three sectors by value are roads (~1.6 trillion), railways (1.5 trillion) and power (~85,032 crore). The NMP does not include land, but lays the road map for monetising brownfield projects where investments have already been made, where a completed asset is languishing or which is not fully utilised, Sitharaman said.

“By bringing private participation, we will be able to monetise these assets better and resources obtained through monetisation would be used for putting further investment into infrastructure building,” she added.

Sitharaman said the asset monetisation programme is aimed at tapping private sector investment for new infrastructure creation, and is necessary for creating employment opportunities, enabling high economic growth, and seamlessly integrating the rural and semi-urban areas for the overall public welfare.

Contractual partnerships for the execution of the asset monetisation pipeline will be with key performance indicators and performance standards, she said. “They are all de-risked assets, and the value from the consideration and private investment which will come into maintaining it and optimally utilising it will generate greater value and unlock resources for the economy,” she said. The NMP will run parallel to the infrastructure creation road map of the government from the current financial year, Sitharaman said. The Centre’s share is about 39 per cent in the ~111trillion NIP. In the roads sector, about 26,700-km stretch would be monetised to mop up around ~1.6 trillion. The National Highway Authority of India (NHAI) and the Ministry of Road Transport and Highways will drive this through the toll, operate and transfer (TOT) and Infrastructure Investment Trusts (Invits) models.

The plan includes monetising power transmission lines of 28,609 ckt km to garner ~45,200 crore. These will be driven by Power Grid Corporation. Monetisation of hydro and solar power generation assets of 6 Gw would help the government realise ~39,832 crore, and would be undertaken by National Thermal Power Corporation, National Hydroelectric Power Corporation, and NLC India. Natural gas pipeline of 8,154 km would be monetised by GAIL with an indicative value of ~24,462 crore. The plan also includes petroleum product pipelines of 3,930 km to be monetised by Indian Oil Corporation, Hindustan Petroleum Corporation and the Ministry of Petroleum and Natural Gas. This would help in realising ~22,503 crore through public private partnerships (PPPS) and Invits.

The government will also monetise warehousing assets of 210 lakh MT to realise ~28,900 crore. These assets are currently owned by Food Corporation of India and the Department of Food and Public Distribution.

For railways, the plan is to monetise railway stations, passenger trains, good sheds, Konkan Railway, Hill Railways, dedicated freight corridor, and railway stadiums to get ~1.52 trillion. In the telecom sector, 2.86 lakh km fibre and 14,917 towers of BSNL and MTNL are planned to be monetised that will help in realising about ~35,100 crore. In aviation, the plan is to sell 25 airports and reduce the Airport Authority of India's (AAI) stake in existing airports such as Delhi, Mumbai, Hyderabad, and Bangalore. This would garner proceeds of ~20,782 crore. In the shipping sector, 31 projects in nine major ports would be monetised to realise ~12,828 crore. In the coal mining sector, 160 projects have been identified involving a value of ~28,747 crore. In sports, two national stadiums and two regional centres would be monetised to get a value of ~11,450 crore. In urban real estate, redevelopment of colonies and hospitality assets worth ~15,000 crore will be monetised.

“This will be like a PPP where the private sector runs the asset for a period of time but hands it back to the government subsequently. The assets and transactions identified under the NMP are expected to be rolled out through a range of instruments,” CARE Ratings said in a note post the announcement.