On Monday, Finance Minister Nirmala Sitharaman launched the National Monetization Pipeline (NMP) worth Rs 6 lakh crore.
The NMP comprises a four-year pipeline of the Centre’s brownfield infrastructure assets from FY22-FY25. Apart from providing visibility to investors, NMP is expected to serve as a medium-term roadmap for identifying potential monetization-ready projects across various infrastructure sectors.
While speaking at the launch, Sitharaman said that the budget identified infrastructure as the key focus for public expenditure. She added that there is no land involved in NMP, only brownfield assets. Public sector enterprises (PSEs) are ramping up CAPEX despite the second wave and Sitharaman will be monitoring this further.
She also mentioned that NMP will talk about those brownfield assets where the investment is already being made and where the assets are either languishing or not fully monetized or under-utilized. “By bringing in private sector participation, we are going to monetize it (assets) better and with whatever resource that you obtained by monetization, you are able to put in for further investment into infrastructure building,” the minister said.
NMP is a culmination of insights, feedback and experiences consolidated through multi-stakeholder consultations undertaken by NITI Aayog, Ministry of Finance and line ministries. Several rounds of discussion have been held by NITI Aayog with the stakeholders. The pipeline has been deliberated at in an inter-ministerial meeting chaired by Cabinet Secretary.
Explaining the scope of the NMP, NITI Aayog CEO Amitabh Kant in a statement said, “The NMP is aimed at creating a systematic and transparent mechanism for public authorities to monitor the performance of the initiative and for investors to plan their future activities. Asset Monetization needs to be viewed not just as a funding mechanism, but as an overall paradigm shift in infrastructure operations, augmentation and maintenance considering private sector’s resource efficiencies and its ability to dynamically adapt to the evolving global and economic reality. New models like Infrastructure Investment Trusts & Real Estate Investment Trusts will enable not just financial and strategic investors but also common people to participate in this asset class thereby opening new avenues for investment. I hence consider the NMP document to be a critical step towards making India’s Infrastructure truly world class.”
As many as 25 Airports Authority of India (AAI) airports, including ones at Chennai, Bhopal, Varanasi and Vadodara, as well as 40 railway stations, 15 railway stadiums and an unidentified number of railway colonies have been identified for getting private investments.
Under the plan, private companies can invest in projects for a fixed return using the InvIT route as well as operate and develop the assets for a certain period before transferring it back to the government agency. Some assets such as warehouses and stadiums can also be given on a long-term lease for operations.
Sitharaman said that the brownfield assets need to be better monetized . “The infrastructure NMP is talking about brownfield assets which need to be better monetized. The ownership of those assets remain with the government and there will be a mandatory hand-back after a certain time. So let there not be any confusion, ‘oh this government is selling away’. No. These are brownfield assets which will still be under government ownership,” she stated.
More than half of the monetization plan is from the roads and railways sector. The biggest chunk of Rs 1.6 lakh crore will come from monetizing 26,700-km of existing operation national highways and new roads. NHAI will take the InvIT (Infrastructure Investment Trust) route for monetizing some of the assets. As many as 400 railway stations, 90 passenger trains, 741-km Konkan Railways and 15 railway stadiums and colonies are planned to be monetized for an estimated Rs 1.2 lakh crore.
Monetizing two national stadiums, including the Jawaharlal Nehru Stadium in New Delhi, and an equal number of regional centres (at Bangalore and Zirakpur) is estimated to yield Rs 11,450 crore. Redevelopment of seven residential colonies in Delhi, including ones at Sarojini Nagar and Nauroji Nagar as well as development of residential/ commercial units on 240 acres of land in Ghitorni in Delhi has also been identified to garner Rs 15,000 crore.
The Budget 2021-22 laid a lot of emphasis on asset monetization as a means to raise innovative and alternative financing for infrastructure and included a number of key announcements.
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