The Cabinet Committee on Economic Affairs (CCEA) on Tuesday allowed state-owned power transmission company Power Grid Corporation of India (PGCIL) to monetise its assets by floating an Infrastructure Investment Trust (InvIT). This will make PGCIL the first such public sector utility in India to issue InvITs.
The CCEA said, in the first tranche, PGCIL would monetise five assets of gross block of Rs 7,000 crore. “These assets, which are mainly high voltage transmission lines and substations, are held by PGCIL in the form of special purpose vehicles (SPVs). The proceeds from the asset monetisation would be deployed by PGCIL in their new and under-construction projects,” said a statement by the CCEA.
In 2018, the Central government had said it was identifying assets, including rail lines, national highways and power transmission lines, for monetising through InvITs. In November 2019, the PGCIL management informed its investors that the size of InvITs issued by the company would be lower than the Rs 10,000 crore mandated by the Central government. The price of the units will be tied to the 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. The CCEA said based on the experience gained, further monetisation would be carried out in future.
“Asset recycling is a key strategy of the Centre to release the capital invested in operational assets, and the proposed InvIT of PGCIL would attract both domestic as well as global investors, including sovereign wealth funds. Sale of assets to InvITs is a way of accessing long term, relatively cheap finance required to fund infrastructure projects in transmission sector,” the CCEA said.
Among power transmission companies, Sterlite Power has floated an InVit — IndiGrid — to monetise its transmission projects.