New Delhi Following the original plan to monetize their oil and gas pipelines through Infrastructure Investment Trusts (InvITs), the Ministry of Petroleum and Natural Gas has asked state-run oil and gas companies to come up with new schemes for asset monetization.
Other options being considered include monetization of receivables, two officials familiar with the developments said.
“They have been asked to look at ways (of doing this). They have been asked to explore various avenues.” The government has asked companies to submit their plans within 15 days.
As per the initial plan, oil and gas companies were likely to liquidate some of their pipelines to InvITs and sell stake in those pipelines. Recently, companies told the ministry that monetization of pipelines through InvITs would be an expensive way to raise capital, following which the government agreed to scrap the scheme.
People in the know said companies reported that with higher credit ratings they can raise capital easily and at a lower cost, which will be beneficial compared to the returns that they would have to pay to InvIT investors.
“For example, the National Highways Authority of India has many (road) properties but it does not have that much creditworthiness, so it (monetization through InvITs) is better for them, but it may not be applicable in the case. of refineries. You (oil and gas companies) can get loans at competitive rates and raise funds at very competitive rates from the market.”
There is a need to be creative in terms of monetization and raising more capital through various means, the official said.
On whether the shelving of the pipeline monetization plan would result in lower realization or capital mobilization by fuel retailers, officials said the government was not revising the targets.
The government’s ambitious asset monetization plan was announced in last year’s Union Budget to augment financial resources for the national infrastructure pipeline. The total notional value of the National Monetization Pipeline for the core assets of the Central Government is estimated at: 6 trillion in the four-year period of FY22-25.
In the context of gas pipelines, the assets considered for monetization during the financial year 2012-25 include pipelines with a total length of 8,154 km, of which 7,928 km are from existing operational pipeline assets and the rest are from pipelines that were completed during the period. expected to be operational during , The total value of natural gas pipeline assets considered for monetization was estimated at 24,462 crore, according to NITI Aayog.
A total of 3,930 km of petroleum product and liquefied petroleum gas (LPG) pipelines were also identified for monetization during the financial year 2012-25, of which 3,196 km are product pipeline assets and 733 km are LPG pipeline assets. Hindustan Petroleum Corporation Limited (HPCL) Mangalore-Hassan Pipeline (LPG Pipeline) was identified for monetization during FY23.
The monetization pipeline has been developed by NITI Aayog in consultation with the infrastructure ministries, based on the mandate for asset monetization under the Union Budget for FY22.
Queries sent to the Ministry of Petroleum and Natural Gas, HPCL, GAIL and IndianOil remained unanswered till press time.
The emphasis on alternative ways to monetize assets comes at a time when the country’s financial crisis has escalated amid the Russo-Ukraine war, and the government is set to suffer. 1 trillion with the latest excise duty cut on petrol and diesel.
The government’s disinvestment plans have also faced hurdles, as the privatization of Bharat Petroleum Corporation Limited is unlikely to happen this fiscal.