Asset monetisation: Coal leads the pack with Rs 50,000-crore mop-up

A sum of Rs 7,500 crore has been mobilised out of Power Grid transmission lines.

Asset monetisation: Coal leads the pack with Rs 50,000-crore mop-up
Coal mining

Coal mining will contribute Rs 50,000 crore, as against an annual sectoral target of Rs3,394 crore, towards the government’s asset monetisation drive, helping the Centre achieve the collection of an aggregate amount of Rs88,190 crore as upfront revenue from brownfield infrastructure assets.

From operational highway stretches, as much as Rs17,000 crore has been mobilised as against the FY22 target of Rs30,000 crore, and more funds could be raised by March-end. A sum of Rs 7,500 crore has been mobilised out of Power Grid transmission lines.

“There is a tremendous amount of MDO (mine-developer-and-operator), which has been done in coal mining, not only in new mining blocks but also in the existing mining blocks,” Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey said here, addressing city-based Merchants’ Chamber of Commerce & Industry on Thursday.

However, the railways may miss the sectoral target by a wide margin. The railways, along with the NHAI, accounts for a major share in the four-year NMP, and has collected just Rs390 crore via monetisation in the current fiscal so far, through the redevelopment of Habibganj railway station, as against the target of Rs17,810 crore for FY22. The target for railways was to monetise 40 stations in FY22.

The agencies concerned — NHAI, PowerGrid, etc — could use these funds to quicken the pace of their capital expenditures, thereby giving a boost to overall public capex and fixed asset creation in the economy.

On LIC’s IPO, Pandey said the issue is ready to hit the market but its timing will depend on market conditions. The government had plans to sell a 5% stake in the insurer through the IPO to garner Rs65,000-70,000 crore by March 31. But, now it is uncertain.

On the disinvestment pipeline, Pandey said the government will soon invite expressions of interest for strategic disinvestment of IDBI Bank, ConCor and NMDC steel plant, among others.

Immediately after the Narendra Modi government unveiled the National Monetisation Pipeline (NMP) in August 2021, this ambitious project to boost non-debt capital receipts in the government sector got off to a quick start. The NMP seeks to generate upfront revenues of Rs 6 lakh crore in four years starting FY22, out of operational infrastructure projects, under various innovative long-term lease plans that don’t require the government to cede ownership of the assets much.

Of course, the funds raised under NMP won’t flow into the Centre’s Budget, instead various public-sector agencies will lay their hands on these receipts and put the monies to use quickly for new asset creation. The capex boost by these public sector entities will also crowd in private capex, particularly in mining, seaport & airport infrastructure, gas pipelines and warehousing facilities.

However, the second phase of NMP in FY23 could be challenging as the target for the year is a whopping Rs1.62 lakh crore.

Under the NMP, there are four approaches to mobilise funds and estimate the monetisation value — apart from market approach and ‘capex route’, conventional accounting methods of book and enterprise values are also being adopted to gauge the monetisation value.

The capex approach is followed for asset classes that may be monetised through public private partnership-based models like mining, highways, ports, airports and power-transmission. Here, capex by the private sector is counted as the monetisation value.

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First published on: 11-03-2022 at 05:40 IST