Govt identifying infrastructure assets to be monetised through InvIT route

Plan to monetise state-owned assets through InvITs was announced by FM Arun Jaitley in his 2018-19 budget speech

The government is identifying assets, including rail lines, national highways and power transmission lines, for monetising through infrastructure investment trusts (InvITs). The first of these is expected to be launched soon, Business Standard has learnt.

While the assets will continue being operated by the relevant central government department or state-owned entity, their ownership will be transferred to an InvIT which will issue units, similar to shares, to investors.

The price of the units will be tied to performance of these assets and the money will be used for further infrastructure development. The amount earned through these units will not be a part of disinvestment or non-tax revenue and, hence, will not be used for bridging fiscal gaps.

“InvITs have been used by private operators. We will use these for public sector assets as well. Assets which are operational and a regular source of income can be monetised,” said a senior government official.

“Say, you identify 10 road assets totalling 700 kilometres. These are currently operated by the National Highways Authority of India (NHAI). You create a separate trust and transfer the ownership of these 10 roads to the trust. The trust will issue units against those assets, which will be subscribed to pension funds, institutional investors and small investors,” explained the official.

The capital earned will be used only for further infrastructure spending. Example, NHAI will continue to operate the assets but legal ownership will belong to the InvIT.

The plan to monetise state-owned assets through InvITs was announced by Finance Minister Arun Jaitley in his 2018-19 budget speech. “The Government and market regulators have taken necessary measures for development of monetising vehicles like infrastructure investment trusts  and real estate investment trust. The government would initiate monetising select CPSE assets using InvITs from next (fiscal) year,” Jaitley said in his February 1 speech.

The first to be monetised will be road assets of NHAI, the official quoted above said, followed by other assets like rail lines, and power transmission lines and other types of assets later.