NMP: Under-utilised brownfield assets to be monetised, Govt to retain ownership
New Delhi: Only under-utilised brownfield assets will be monetised under the National Monetisation Pipeline (NMP) of the Centre, Finance Minister Nirmala Sitharaman said on Monday. The NMP targets to raise Rs 6 lakh crore through asset monetisation of Central Government, over a four-year period, from FY22 to FY25. However, the ownership of the assets will be retained by the Centre.
Besides, no land parcels will be taken up under the NMP, Sitharaman said after unveiling the asset monetisation pipeline of Central ministries and public sector entities. “Asset monetisation, based on the philosophy of creation through monetisation, is aimed at tapping private sector investment for new infrastructure creation,” she said. “This is necessary for creating employment opportunities, thereby enabling high economic growth and seamlessly integrating the rural and semi-urban areas for overall public welfare.”
According to Sitharaman, the NMP focuses on brownfield assets in which investments have already been made but are under-utilised. These under-utilised brownfield assets are in sectors such as roads, railways, airports, mines and power. Sitharaman said the NMP is necessary for creating employment and triggering high economic growth. Furthermore, the NMP will bring in private capital which will be used for infra creation, she said.
As per an official communique, the top 5 sectors in terms of contribution to NMP are roads (27 per cent) followed by railways (25 per cent), power (15 per cent), oil and gas pipelines (8 per cent) and telecom (6 per cent). In terms of annual phasing by value, 15 per cent of assets with an indicative value of Rs 0.88 lakh crore are envisaged to be rolled out in the current financial year (FY22). Additionally, the assets and transactions identified under the NMP are expected to be rolled out through a range of instruments.
“These include direct contractual instruments such as public private partnership concessions and capital market instruments such as Infrastructure Investment Trusts (InvIT) among others,” the communique said.
“The choice of instrument will be determined by the sector, nature of asset, timing of transactions, target investor profile and the level of operational or investment control envisaged to be retained by the asset owner etc.”
“With the announcement of NMP, and laying out a clear roadmap for the same, we have got ‘serious’ investor attention across the globe after a while. Long term investors interested in Infrastructure investments always wanted to know what’s next?” KPMG in India Partner, and Head, Infrastructure, Manish Aggarwal said.