NEW DELHI : The government has accelerated the process of creating a special purpose vehicle (SPV) for the planned monetization of land and non-core assets of state-owned companies, with the Union cabinet expected to approve its formation soon.

       A top official said that following the cabinet clearance, the Department of Public Enterprises (DPE) will take over setting up the SPV, which will be run as a professional company to derive more value from the assets.

       “The proposal has been sent to the Cabinet Committee on Economic Affairs. If we get the approval now, then work would start on its formation," said Tuhin Kanta Pandey, secretary of the department of investment and public asset management (DIPAM).

       The asset monetization proposed by finance minister Nirmala Sitharaman in last year’s budget is distinct from the government’s disinvestment plan, which involves selling stakes in public sector enterprises.

       Pandey said DIPAM would hand over the SPV to the DPE after the cabinet’s approval, even though asset monetization comes under the purview of his department.

       DPE, which was subsumed in the finance ministry last year, is the nodal department for all central public sector enterprises (CPSEs) and formulates policies on these government-run companies. The department was under the erstwhile ministry of heavy industries and public enterprises until July.

       “We will request the DPE to carry it forward. Now DPE is with finance (ministry), so they will be able to carry it forward," Pandey said.

       The SPV, to be named the National Land Monetisation Corp. (NLMC), will have an initial authorized share capital of ？5,000 crore and a subscribed share capital of ？150 crore to carry out the monetization of the land and other non-core assets, such as properties owned by CPSEs. The Economic Survey for the current year also said that the government would set up the NMLC.

       “The idea is that a specialized company is formed which should be capable enough of handling issues of a lot of land being available but the government not having the capacity for monetization," Pandey said.

       He added that the SPV as a professional organization would be expected to get a better valuation for the land parcels and non-core assets that many CPSEs may not be able to monetize on their own. Public sector companies have referred nearly 3,400 acres of land and other non-core assets to the government for monetization.

       MINT PREMIUM See All

       Premium 6 Ways of Spotting a Fraud Company

       Premium Six health insurance riders you can add to a mediclaim ...

       Premium Centre plans fresh stimulus package

       Premium RBI likely to raise reverse repo rates, all eyes on liq ...

       The formation of the SPV was announced by finance minister Sitharaman last year because monetization of land and other non-core assets of CPSEs and departmental arms is in line with international best practices.

       Subscribe to Mint Newsletters

       * Enter a valid email

       * Thank you for subscribing to our newsletter.

       Never miss a story! Stay connected and informed with Mint. Download our App Now!!