A quick report card of govt's infra asset monetisation initiative

While govt has earned about 16% road and power transmission assets against an expected run rate of Rs 88,190 cr in FY22, progress in most other areas has been slow

The government has earned about 16 per cent from asset monetisation of roads and power transmission systems against an expected run rate of Rs 88,190 crore in FY22. 

Data provided by the government in its budget papers for FY23 shows a large number of other proposals are yet to complete the varying stages of approval including those of the cabinet.

The National Monetisation Pipeline (NMP) was set up last year by the finance ministry and Niti Aayog to raise money by leasing out government assets. It estimates aggregate monetisation potential of Rs six trillion from these core assets of the central government, over a four-year period, from FY22 to FY25.

Those realised so far are from the National Highways Authority of India, at Rs 7,350.4 crore and PowerGrid Corporation (Rs 7,735 crore). Both had been successful in their asset monetisation initiatives--NHAI through the Toll Operate and Transfer (TOT) model for its roads and PowerGrid through setting up of InvIT for five of its transmission lines. 

Under both models, stable and operational projects are given out in bundles to the private sector, including long-term global strategic and financial investors operating for pension and sovereign funds, insurance companies and asset managers. The assets are to used by them for operation, maintenance and toll collection in time lines of 15-30 years against an upfront concession fee payment.

To make the process easier the finance ministry has also set up an asset monetisation dashboard. The dashboard offers live information from ministries about their asset registers along with their designated nodal officials. The budget document note that 26 states are also there on the dashboard. 

Progress in ministries other than road and power to put up assets for monetisation is, however, slow. In Railways, the monetisation of the Dedicated Freight Corridors have not reached cabinet for approval since both the Western and Eastern wings are yet to become fully operational. The target date according to Budget FY22 is June 2022. 

Land parcel monetisation to be taken up by Rail Land Development Authority. It has identified 111 Railway land parcels, 84 colonies, four Hill Railways including those of Darjeeling, Kalka-Shimla, Matheran & Nilgiri, as well as Karnail Singh Stadium and 15 others and 84 Multi-Functional Complexes. It is a long list but except for a dozen odd Multi-Functional Complexes, the others are just pending. The organisation has also been cryptic in its response—“balance are in different stages”.

On a brighter note, in civil aviation monetisation of six key airports - Varanasi, Amritsar, Bhubaneswar, Raipur, lndore and Trichy along with seven smaller airports shall come up in FY23. Their cabinet notes “is under process”, the documents note.

Similarly the target for asset monetisation of some of the warehouses of its companies like CWC, FCI and CRWC projected at Rs 28,900 crore is yet to be completed. While Transaction Adviser has been appointed by FCI but to derive better value, the government has decided to bundle some of the warehouses instead of considering each location as a single project. The “revised proposal is  yet to be received…from FCI. Nafed too has plans to develop 15,000 MT of warehouses on vacant land parcels owned by it. The deadline is March 2022 and the department has informed the finance ministry that “private partners for implementation have been selected through tender process”. There are no further details about the necessary approvals to be taken from the cabinet. 

The progress report for bundling of oil pipelines of GAIL, IOCL and HPCL is even more distant. “Report of transaction advisor appointed by GAIL has been received and is being examined”, is the cryptic comment on the progress achieved since August last year. 

The money to be raised from these monetisation measures are important for the government to finance new infrastructure construction. Budget FY22 and FY23 have targeted Rs 5.54 trillion and Rs 7.5 trillion of government spending on infrastructure. The assets mentioned by finance minister Nirmala Sitharaman in her speech last year included, other than roads, power grid, airports, railways, oil and gas pipelines and warehouses of FCI and Nafed, among others.  

The asset monetisation protocols
 

These transactions have to go through many hoops. For instance for the road TOT bundles, the steps are as follows:

• Sebi approval received on Draft Placement Memorandum (DPM)
• In-principle approval received from National Stock Exchange (NSE) for listing. 
• Bank debt of Rs 2,000 crore tied up. 
• The empowered High-level Committee for Price Discovery finalised the value as Rs 6,012 crore. 
• Placement Memorandum (PM) filed with Sebi on October 26, 2021. 
• Market issue opened on October 29, 2021 and closed on November 02, 2021.
• After closing of issue, units were issued and Final Placement Memorandum was filed with Sebi on November 11, 2021. Fee notification for all the 5 sections has been published. 
• Document for Financial Close as per concession agreement submitted by the concessionaire on December 9, 2021 and the date of financial close declared on December 12, 2021. 
• Disbursement of Concession Fee of Rs 7,350.40 crore (including debt of Rs 2,000 crore availed) received by NHAI 
• The Appointed Date for transfer (in this case) December 16, 2021 at 00:00 hrs declared