Asset monetisation

The National Monetisation Pipeline (NMP) is an ambitious plan under which the Central government hopes to raise Rs 6 lakh crore over a four-year period by involving private companies in infrastructure sectors – right from roads, railway stations and airports to power transmission lines, telecom fibre and mobile towers, and oil and gas pipelines. The Centre will retain the ownership of these apparently under-utilised assets, which would have to be transferred back to the public authority at the end of the ‘transaction life’. The modalities of the mandatory handback should be clearly spelt out to help private players decide for how long they can commit themselves to the projects. Lack of clarity on this issue can defeat the purpose of the entire exercise. Moreover, the unrewarding experience of a few firms can discourage others from taking the plunge.

According to the NMP document, the monetisation value that can be realised may either be in the form of upfront accruals or by way of private sector investment. The biggest chunk (Rs 1.6 lakh crore) is expected to come from monetising 26,700 km of existing national highways and new roads. The onus will be on the Central and state governments to provide an enabling environment to the companies to run their operations smoothly. The ongoing farmers’ agitation has forced the closure of about 50 toll plazas in Punjab and Haryana for the past eight months or so, with estimated losses being around Rs 5 crore daily. Such prolonged disruptions won’t inspire confidence among investors. In civil aviation, the successful asset monetisation of four major airports – Mumbai, New Delhi, Hyderabad and Bengaluru – has set the ball rolling for maximising the gains, even as the scenario is starkly different in the power sector. Punjab, for instance, has been bearing the brunt of purchase agreements signed with independent power producers, with cheap tariff and improved supply remaining elusive.

The Centre intends to make policy and regulatory interventions to ensure ‘efficient and effective’ asset monetisation. Real-time monitoring has been envisaged. How much benefit the government will actually derive from the plan will depend on the rollout, followed by course correction in case things go awry.