Centre likely to go Canada way to set up SPV for land monetisation

The government is studying several global sovereign-run land banks and may settle for a model similar to the one in Canada as it finalises setting up of a special purpose vehicle (SPV) for monetisation of assets of state-run companies.

The Department of Investment and Public Asset Management (Dipam) is studying the model of Canada Lands Company — a federal government entity that specialises in real estate and managing tourist destinations — and considers it ‘good’ to replicate in India, said a top government official.

In the Budget Speech, Finance Minister Nirmala Sithraman had proposed incorporation of a SPV that would carry out monetisation of surplus land with government departments and public sector units (PSUs). “Monetising of land can either be by way of direct sale or concession or by similar means,” Sitharaman had said.

Over the years, PSUs have been unsuccessful in selling their land assets due to pending litigation and lease terms. The SPV would have experienced professionals who would help PSUs in disposing their surplus land assets marred by litigation.

Canada Lands Company has been able to dispose and monetise surplus land of government departments, and Dipam is examining it, the official said. The government is exploring if the Canada model can be replicated, but at the same time would try to keep the SPV unique in the Indian context, he said. “We are studying the Canada model, among others such as the one in Britain,” said the official. World Bank is assisting the government with this, he said.

Soon, the structure of the organisation would also be finalised, the official said. The government is also considering how these assets would be transferred to the SPV, and subsequently sold to a buyer. “It may not be a direct sale, it could be a concession or a public private partnership arrangement, too,” he said.

The Canada model

Canada Lands Company was established in 1956, and is a self-financing federal government corporation. The company receives no government funding, and pays dividend to the Canadian government from the profit it makes.

The company works with the local government and communities to create projects that are financially viable, with an aim of value creation.

One of the mandates of the company is to ensure orderly disposition of selected surplus properties with best value. When the body was set up, government departments were incentivised to dispose of their holdings with no immediate benefits, paving the way for private sector to make a better use of such assets.

It also maintains ownership or management of certain properties, which benefit from government presence such as the tourist attraction destinations, the famous one managed by the company being Canada’s National Tower. The company also purchases strategic surplus properties at fair market value and then improves, manages or sells them for the benefit of local communities and its shareholder — the Canadian government. Since 1995, the company has developed nearly 2,000 affordable housing units and 12 school sites, among others.