Source: The Hindu, Indian Express, Livemint and PIB
List of Contents
What is the News?
The Union Minister for Finance has launched the National Monetisation Pipeline.
About National Monetisation Pipeline:
Prepared by: It was prepared by NITI Aayog in consultation with infrastructure line ministries, based on the mandate for ‘Asset Monetisation’ under Union Budget 2021-22.
Note: Asset monetisation consists of a limited period transfer of performing assets (or disposing of non-strategic / underperforming assets) to unlock “idle” capital and reinvesting it in other assets or projects that deliver improved or additional benefits.
- To unlock the value of investments in brownfield public sector assets by tapping institutional and long-term capital, which can thereafter be leveraged for public investments.
- A brownfield investment is a form of investment in which a company or government entity purchases or leases existing production facilities to launch a new production activity.
- 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.
Key Features of the Plan:
- The National Monetisation Pipeline comprises a four-year pipeline from 2022-2025 of the central government’s brownfield Infrastructure Assets.
- The top three sectors identified for asset monetisation include railways, airports and coal mining.
- Besides these, assets such as roads, power transmission lines and gas pipelines will also be part of the monetisation plan.
- Under the plan, private firms can invest in projects for a fixed return using the Infrastructure investment trusts(InvITs) route as well as operate and develop the assets for a certain period before transferring them back to the government agency.
- Hence, the ownership (of assets) will remain with the government and there will be a mandatory hand back after a certain time.
- Moreover, only under-utilised assets will be monetised, and the plan will help identify brownfield assets that need to be better monetised.
Challenges of NMP: The key challenges that may affect the NMP roadmap are
- Lack of identifiable revenue streams in various assets,
- level of capacity utilisation in gas and petroleum pipeline networks,
- Absence of proper dispute resolution mechanism,
- Regulated tariffs in power sector assets
- Low interest among investors in national highways below four lanes and
- Lack of independent sectoral regulators as potential impediments.