The Centre’s asset monetisation target of Rs 1.62 trillion for the current financial year will likely be missed by around Rs 60,000 crore. Besides little achievement by the railways, Airports Authority of India and the telecom sector, the roads and power sectors will also miss the respective targets.
According to sources, even though the railways’ monetisation target has been reduced to about Rs 30,000 crore for FY23 from the initial aim of Rs 57,222 crore, it may draw a blank. The transporter has made little progress in developing railway stations through the public-private-partnership (PPP) model.
Monetisation of coal and other mining assets is, however, progressing at better-than-expected pace. While the target for this segment was increased to Rs 37,500 crore from the initial goal of Rs 6,060 crore, the achievement may be close to Rs 60,000 crore, an official said. In FY22 also, the mining sector had yielded upfront revenues and capex to the tune of Rs 58,000 crore against the target of Rs 3,394 crore.
The proposed monetisation of road assets worth Rs 33,000 crore, the second-biggest component of the National Monetisation Pipeline (NMP), for FY23 as well as Power Grid
In the Finance Bill 2023, the government has proposed that InvITs’ distribution by way of ‘repayment of debt’ to the unitholders will be covered under the ambit of taxation as other income (net of the cost of acquisition of the unit) which earlier was not captured. This would expose foreign investors, key participants in InvITs, receiving the said distribution to 40% tax. It will also affect the returns of other investors, including retail.
Since the new provision could also affect the yield of investors on their investments made in previous InvITs of NHAI and Power Grid, they have delayed fresh tranches of InvITs and waiting for clarity. While NHAI had plans to raise Rs 5,000-10,000 crore in February-March, Power Grid was expected to raise its entire Rs 7,700 crore through InvITs.
“The proposed change has come to impact the attractiveness of InvITs, as it could reduce the IRR (internal rate of return) of retail investors, who were intentionally or unintentionally benefitting from the aforesaid loophole,” Vishwas Panjiar, Partner, Nangia Andersen, said.
The aggregate asset pipeline under the NMP over the four years, FY22-FY25, is indicatively valued at Rs 6 trillion or about 14% of the central share of the National Infrastructure Pipeline (NIP) of Rs 43 trillion (out of a total Rs 111 trillion in six years through FY25). This indicative value refers to the value expected to be realised by the asset owners through the monetisation process, either in form of accruals or by way of private sector investment.
Even though the railways’ target has been reduced to about Rs 30,000 crore for FY23 from the initial aim of Rs 57,222 crore, it will almost fully miss the target. It has made little progress to develop railway stations through the public-private-partnership (PPP) model.
Thanks to the achievements in the monetisation of assets such as mining blocks, road assets and power transmission lines, the Centre exceeded the target of Rs 88,200 crore by achieving about Rs 1 trillion monetisation in FY22.
The proposed recycling of a dozen airports to achieve monetisation of Rs 7,299 crore would also be missed in FY23. The AAI has identified six airports – Bhubaneswar, Varanasi, Amritsar, Raipur, Indore and Trichy – for operation, management and development under PPP. Bids haven’t been called yet, under the PPP process.