Recently, the union minister for Finance and Corporate Affairs, Smt Nirmala Sitharaman, launched the asset monetisation pipeline of Central ministries and public sector entities: ‘National Monetisation Pipeline (NMP)’ at New Delhi.
Union Budget 2021-22 has identified monetisation of operating public infrastructure assets as a key means for sustainable infrastructure financing. Towards this, the Budget provided for preparation of a ‘National Monetisation Pipeline’ of potential brownfield infrastructure assets.
The report on the National Monetisation Pipeline is organized into two volumes:
Volume I: A guidance book, detailing the conceptual approaches and potential models for asset monetisation
Volume II: Actual roadmap for monetisation, including the pipeline of core infrastructure assets under Central Govt.
The pipeline has been developed by NITI Aayog, in consultation with infrastructure line ministries. It is based on the mandate for ‘Asset Monetisation’ under Union Budget 2021-22.
Besides providing visibility to investors, NMP will also serve as a medium-term roadmap for the Asset Monetisation initiative of the Government.
The framework for monetisation of core asset monetisation has three key imperatives:
- Monetization of ‘Rights ‘NOT’ ownership’, Assets handed back at the end of transaction files
- Brownfield de-risked assets, stable revenue streams
- Structured partnerships under defined contractual framworks with strict KPIs & performance standards
The National Monetisation Pipeline comprises a four-year pipeline of the Central Government’s brownfield infrastructure assets.
NMP estimates aggregate monetisation potential of Rs 6.0 lakh crores through core assets of the Central Government, over a four-year period, from FY 2022 to FY 2025.
The estimated value corresponds to ~14% of the proposed outlay for Centre under NIP (Rs 43 lakh crore).
This includes more than 12 line ministries and more than 20 asset classes. The sectors included are roads, ports, airports, railways, warehousing, gas, etc.
The top 5 sectors (by estimated value) capture ~83% of the aggregate pipeline value.
These top 5 sectors include:
- Roads- 27%
- Railways- 25%
- Power- 15%
- Oil & gas pipelines- 8%
- Telecom 6%
The end objective of this initiative to enable ‘Infrastructure Creation through Monetisation’ wherein the public and private sector collaborate, each excelling in their core areas of competence, so as to deliver socio-economic growth and quality of life to the country’s citizens.