Centre lays down plans to monetise Public Sector Undertakings

New Delhi: The Union government has unveiled a four-year National Monetisation Pipeline with the aim of raising Rs 6 lakh crores, transferring the brownfield projects to the private parties to operate while keeping the ownership of the projects with the government. The collected funds are reported to be used for infrastructure developments across the country.

Announcing the NMP, Finance Minister Nirmala Sitharaman stated that assets that are under-utilised will be used to monetise. Brownfield projects are in which the investments are being made, where there are assets either languishing or not fully monetised or under-utilised. Those projects will be monetised by bringing in private players but the ownership will remain with the government, the Finance Minister emphasised.

About 66 per cent of the estimated value of the monetisation lay on roads, railways and power sector assets and the remaining value realisation will be made from sectors including telecom, mining, aviation, ports, natural gas and petroleum product pipelines, warehouses and stadiums, according to the laid out plans.

Finance Minister also underlined that the projects that are proposed to be handed over to the private parties to operate will mandatorily be taken back after a certain period.

Though the NMP roadmap detailed the sectors to be monetised, there are potential challenges that may affect the NMP, including the absence of the identifiable revenue streams in various assets, to what extent gas and petroleum pipeline networks can be utilised for the revenue generation, dispute redressal mechanism, the nominal and regulated tariff in the power sector and low interest among investors in national highways below four lanes.

According to the NMP roadmap, the money attained through the monetization exercise will be channelized into the selected infrastructural developments across the country.

The classification of the monetisation of the proposed asset is as follows, Rs 1.6 lakh crore from the roads sector, Rs 1.5 lakh crore from the railway sector and Rs 79,000 crore from the power sector, Rs 20,800 crore from airports, Rs 13,000 crore from ports, Rs 35,000 crore from telecom, Rs 11,500 crore from stadiums and Rs 45,200 crore from power transmission sectors.

Most of the asset monetisation will take place either through the InvIT mode or public-private partnerships.

Nirmala Sitharaman had first spoken of a National Monetisation Pipeline during Union Budget 2021 and asserted that the government was looking at innovative ways to raise finances.

Asset monetisation is the process of creating new sources of revenues by unlocking the value of unutilised and underutilised public assets, according to the Department of Investment and Public Asset Management website.

In order to pursue the state government to divest their stakes in the public sector undertakings, the Centre government is said to have set aside Rs 5,000 crore as an incentive besides a 100 per cent matching value of the divestment to the state. The Centre also offered to states a 50 per cent amount raised through listing if they list a public sector undertaking in the stock markets.