Following through on the budget public asset monetization plan To fund new capital expenditure on infrastructure, The government has released a comprehensive list of projects and facilitiesWill be offered to private investors over the next four years. What differentiates it from the new public sector disinvestment policy is that no change in ownership is envisaged. The government estimates these assets – from airports, coal mines, highways, even urban areas, stadiums and hotels – to get around ₹5.96-lakh crore through structured leasing and securitization transactions. This, in turn, can help fund National Infrastructure Pipeline With new projects worth Rs 100 lakh crore, however, the government has said that financial constraints are not the trigger for the scheme. As emphasized by Finance Minister Nirmala Sitharaman, these properties or the land therein will not be sold, but private players will be asked to pay for the operation and management rights and will be expected to modernize those properties which are either are bad or simply under-utilised. An Infrastructure Investment Trust (InvIT) structure has already been used this year by POWERGRID Corporation to raise funds for its transmission line network and can be used for highways, gas pipelines and railway tracks including dedicated freight corridors. Is. For Ports, Mining, Railway Stations, Concession Agreements outlining the framework for PPPs are proposed.
Around ₹88,000 crore is expected from the National Monetization Pipeline (NMP) in this year itself, in addition to the ₹1.75-lakh crore already estimated in the budget. Sale of public firms like Air India and BPCL. While this government has yet to complete a single PSU sale, the risk of adverse audit paras regarding valuation and procedures on monetization deals also looms large. However, post-transactional hassles in outright sales may be of limited nature. With the proposed concession period for some assets lasting up to 60 years, NMP deals, in contrast, can cause long-term headaches if they are not structured keeping end-user interests in mind while balancing profit and utility objectives. The sharing of risks and rewards between public and private partners needs to be carefully weighed for each sector. There is a need for checks and balances for estimates versus actual infrastructure usage at the time of bidding. If the government had implemented its 2014 budget promise of setting up an apex body to formulate new PPP models, learning from past mistakes, India’s institutional capacity for NMPs would have been more mature by now. Just as disinvestment deals during a recession can stifle new investments and risk the tag of ‘fire sale’, revenue projections for PPP assets may be lowered now leading to super-normal profits for the operator in the future. After that there may be fewer bids. It’s important to get the fine-tuning right to this grand scheme.
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