Finance minister Nirmala Sitharaman on Monday announced a pipeline of assets that the Centre is looking to monetise to collect Rs six trillion to partly fund its ambitious infrastructure plans over four years ending financial year 2024-25. About Rs 88,000 crore will be realised through asset monetisation, which will be carried out through private sector's participation without diluting the government's ownership, in the current financial year.

       The National Monetisation Pipeline (NMP) would constitute 14 per cent of the Centre's outlay at Rs 43.29 trillion under the National Infrastructure Pipeline (NIP). Global players such as Blackstone, Blackrock, Macquerie have shown interest in participating in monetisation of these assets.

       The asset monetisation plan covers 20 asset classes spread over 12 line ministries and departments. The top three sectors by value are roads, railways and power. The NMP does not include land, but lays the roadmap 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.

       Announcing the plan, 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 overall public welfare.

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

       The contractual partnerships for execution of the asset monetisation pipeline will be with key performance indicators and performance standards, the finance minister said.

       “They are all derisked assets and the value from the consideration and the 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 roadmap of the government from the current financial year, Sitharaman said. The Centre’s share is about 39 per cent in Rs 111 trillion NIP.

       In the roads sector, about 26,700 km stretch would be monetised to mop up around Rs 1.6 trillion. National Highway Authority of India (NHAI), and the Ministry of Road Transport and Highways will drive this through 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 Rs 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 Rs 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 Rs 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 Rs 22,503 crore through public private partnerships (PPPs) and InvITs.

       The government will also monetise warehousing assets of 210 lakh mt to realise Rs 28,900 crore. These assets are currently owned by Food Corporation of India and 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, railway stadiums to get Rs 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 Rs 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 Rs 20,782 crore.

       In the shipping sector, 31 projects in 9 major ports would be monetised to realise Rs 12,828 crore.

       In the coal mining sector, 160 projects have been identified involving a value of Rs 28,747 crore. In sports, 2 national stadiums and 2 regional centres would be monetised to get a value of Rs 11,450 crore. In urban real estate, redevelopment of colonies and hospitality assets worth Rs 15,000 crore will be monetised.

       The ownership of such assets would be with the government and there must be handover to the government after the tenure of the contract, CARE Ratings said in a note post the announcement. “This will hence be a 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,” it said.

       Sitharaman while announcing the plan said it's important that India recognises the time has come for making the most out of our assets. “The economy needs more resources, the economy wants that kind of liquidity and that kind of value unlocking with which we can move forward.

       Sitharaman further enumerated the reforms and initiatives undertaken by the Narendra Modi government towards accelerated infrastructure development and for incentivizing private sector investments. This included the recent scheme to incentivize state governments to recycle their assets for fast-tracking greenfield infrastructure.

       Announcement of the plan is timely, and will provide much needed boost to the economy by creating more resources and liquidity in the market, said Alok Saraf, partner at Grant Thornton Bharat.

       “This is likely to support the launch of more investments in roads, power and other similar sectors and will lead to optimization in the utilization of assets owned by the government. This announcement comes at a point where the market is bullish and FDI inflow has grown over 40%, hinting on India being a preferred investment destination amongst global investors. This asset monetization model will not only lead to better financing structures and mechanisms, but participation of private sector will also give push to digitization and innovation,” Saraf said.

       Handholding states

       Nodal officers have been appointed by 26 states and union territories, and 4 states have created their pipeline of assets that can be monetised, NITI Aayog CEO Amitabh Kant said.

       Most states have shown willingness to monetise their assets, he said.

       To nudge states to participate in the exercise, the centre has already announced up to Rs 5,000 crore financial assistance to them which is budgeted as interest free loan if they divest and monetise their assets, or list state owned entities on exchanges, Sitharaman said.

       “We are with the states, we want to work together with the states...central ministries now only need to gear up towards taking this initiative forward,” said NITI Kant.

       Due to the second wave of Covid-19 pandemic, the asset monetisation process was slowed, but the government will now push the pedal on asset monetisation in partnership with states, he said.

       “We had held webinars in states and with stakeholders and lot of top investors of the world...Blackstone, Blackrock, Macquerie have shown interest in these projects,” Kant said.