The Union Ministry of Road Transport and Highways and the National Highways Authority of India (NHAI) will implement the road assets monetisation.
Under the ambitious national asset monetisation plan, road assets worth Rs 1.60 lakh crore will be monetised over four years till Financial Year 2025 as announced by Finance Minister Nirmala Sitharaman on Monday. The Union Finance Minister said the asset monetisation does not involve land selling and it is about monetizing brownfield assets. The Union Ministry of Road Transport and Highways and the National Highways Authority of India (NHAI) will implement the road assets monetisation. Niti Aayog CEO Amitabh Kant was quoted in a PTI report saying the road asset monetisation’s potential models would be Toll Operate Transfer (ToT) and Infrastructure Investment Trust (InvIT). The Toll Operate Transfer is one of the main models for monetization, employed successfully in the road sector both by state as well as central entities.
The TOT concession framework was introduced by MoRTH in the year 2016 for road assets’ monetisation, by the highway authority to long-term investors. The Toll Operate Transfer model mainly entails securitisation of the toll receivables by taking an upfront concession fee from the selected bidder and determined through a transparent competitive bidding process.
An innovative trust-based financial instrument, InvIT enables participation in financing of infrastructure through a stable and liquid instrument. An opportunity is provided by InvITs to invest in infrastructure assets with predictable cash flows as well as dividends. In India, InvITs have been introduced in the year 2014 and are employed by infra asset owners to pool in money from a diverse range of investors against pay-out of cash flow generated on a periodic basis by the assets.
On Monday, the Finance Minister announced a Rs 6 lakh crore NMP that will look to unlock value in infrastructure assets across various sectors including, power, road and railways. The Union Budget of the year 2021-22 had identified operating public infra assets’ monetisation as a crucial means for sustainable infrastructure financing. The Union Budget, towards this, provided for creation of a ‘National Monetisation Pipeline’ of potential brownfield infra assets.