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Assets worth Rs 96,000 crore monetised in 2021-22

The numbers for the last fiscal were discussed at a review meeting chaired by Finance Minister Nirmala Sitharaman on Tuesday.

Finance Minister Nirmala SitharamanFinance Minister Nirmala Sitharaman (File photo)

THE CENTRE has wrapped up transactions worth an estimated Rs 96,000 crore in 2021-22 under the National Monetisation Pipeline (NMP), surpassing the target of Rs 88,000 crore, according to a government official. The coal and mining sectors, roads and power assets were key to the monetisation target being surpassed last fiscal.

Sources said new models such as InViTs (Infrastructure Investment Trusts), REITS (Real Estate Investment Trusts) and public-private partnership models such as the toll-operate-transfer (TOT) in the roads sector and Mine Developer and Operator (MDO) contracts in the coal sector proved instrumental in the targets being met. It is learnt that railways assets, expected to be among the biggest contributors, relatively underperformed during the fiscal.

The numbers for the last fiscal were discussed at a review meeting chaired by Finance Minister Nirmala Sitharaman on Tuesday. The meeting was called to assess the progress of NMP, including the challenges and hurdles that some ministries faced, and was attended by Niti Aayog officials and secretaries of various ministries. The target for 2022-23 fiscal was fixed at Rs 1.67 lakh crore at the meeting.

In FY’22, the Ministry of Coal was the biggest contributor to the asset monetisation pipeline, generating a monetisation value of about Rs 40,000 crore through the auctioning of 22 coal blocks and awarding MDO contracts, the official said. Mineral mining assets achieved an estimated monetisation value of Rs 18,700 crore in FY22 after the completion of 31 mineral blocks auctions.

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The Ministry of Road Transport and Highways achieved an overall monetisation value of about Rs 23,000 crore, according to the official. In FY22, close to 390 kilometres of roads were monetised under the Infrastructure Investment Trust (InvIT) mode and three Toll Operate
Transfer (TOT) bundles were bid out.

The Ministry of Power reported a monetisation achievement of Rs 9,500 crore after state-owned transmission major Power Grid Corporation undertook the monetisation of its first batch of transmission assets using the InvIT model. “Apart from that, the National Hydroelectric Power Corporation (NHPC) also completed securitisation of one of its operational hydel assets raising about Rs 1,000 crore,” the official said.

Investment Trusts are akin to mutual funds and enable small investors to buy units in the trusts that are listed on the exchanges, and to then have a share in the income stream of these vehicles in the form of dividend and unit distribution. The other monetisation approaches are essentially user fee based.

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The NMP was unveiled in August 2021 with an estimated target of Rs 6 lakh crore over four years. It aims to unlock value in brownfield projects by engaging the private sector, transferring to them revenue rights and not ownership in the projects, and using the funds generated for infrastructure creation across the country. Roads, railways, and power sector assets comprise over two-thirds of the total value of the assets to be monetised. ?

Even though the overall target of NMP for FY22 was surpassed, several ministries, it is learnt, were unable to meet their respective year-long targets. At the review meeting, it was decided that for these ministries, their targets would be carried forward to the next year. “Some ministries lack the technical expertise to put their monetisation plans in action and that was also discussed at the meeting,” said the official.

The underperformance of railways assets was also discussed at the review meeting as it could achieve a monetisation value of only Rs 800-900 crore against a target of Rs 17,810 crore. “Their attempts to privatise some trains were unsuccessful as they did not attract bids for their plans,” said the official.

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In a monetisation transaction, the government essentially transfers the revenue rights to private parties for a specified period in return for upfront money, a revenue share, and commitment of investments in the assets. REITs and InvITs, for instance, are the key structures used to monetise assets in the roads and power sectors.

These are also listed on stock exchanges, providing investors liquidity through secondary markets as well. While these are structured financing vehicles, other monetisation models on public private partnership basis include: TOT, Operate Maintain Transfer (OMT), and Operations, Maintenance & Development (OMD). OMT and TOT have been used in the highways sector while OMD is being deployed in case of airports.

 

First published on: 13-04-2022 at 04:00:33 am
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