Oil & gas assets: Centre eyes innovative ways for asset monetisation

Taking a leaf out of the successful asset monetisation in coal and mineral mining, the Centre is exploring innovative ways to monetise assets in oil and gas as well as other sectors in the ongoing fiscal year. The NITI Aayog, in consultation with administrative ministries, is exploring different ways in which oil and gas assets can be monetised and reforms that can be undertaken in the sector to promote private sector participation and ease of doing business as introduced in the mining sector, an official said.
 
As the government’s policy think tank is finalising the pipeline for asset monetisation pegged at Rs 1.6 trillion for FY23, it is also holding deliberations with ministries on how sector-specific reforms can push the Centre’s asset monetisation drive. It is also discussing ways through which monetisation of assets can be made attractive for the private sector, taking a cue from success of asset monetisation in coal and mining sector where awarding mine developer and operator (MDO) contracts and amendments to Mines and Mineral Development and Regulations Act have helped in ushering private sector participation. These include backstop arrangements to lower risks as well as favourable usage agreements, an official said.
 
The Centre already has assets worth Rs 1.6 trillion in the pipeline for monetisation, but needs to keep a pipeline that’s four to five times the realisable value ready to meet its Rs 1.6-trillion target for this year, the official said. For FY23, the government is hoping that oil and gas, warehousing and railway assets, among others, will lead the Centre’s asset monetisation drive.
 
Towards this, the Centre is looking at expanding the transmission gas pipeline network and improving the capacity utilisation of available pipelines. With public sector undertakings (PSUs) dominating the pipeline development and operation space, the government is looking at augmenting the natural gas transmission infrastructure in the country, and attract private participants in the sector.

To usher in private sector participation, and lower the risks involved, backstop arrangements are being explo­red in gas transportation agreements to provide comfort to investors. Also being explored are favourable terms in pipeline usage agreement that will make these assets attractive.
 
The share of natural gas pipeline in the Rs 6-trillion National Monetisation Pipeline is about 4 per cent, and the assets on the block include select gas pipelines with an aggregate length of 8,154 km, according to the plan.
 
For petroleum and petroleum products, that also have a 4 per cent share in terms of value in NMP, bundling of assets may be undertaken to ensure better risk management. Discussions with administrative ministries are underway to find suitable models for monetisation, the official said.
 
In FY22, the Centre surpassed its asset monetisation target of Rs 88,000 crore, realising Rs 96,000 crore. The monetisation drive was led by roads, power, coal and mining ministries on the back of reforms and monetisation models such as Infrastructure Investment Trust and Toll Operate Transfer utilised by some of these ministries. Monetis­ation through coal and mineral mining collectively was Rs 58,700 crore; Rs 23,000 crore through roads; Rs 9,500 crore through power sector assets.