Finance Minister launches the National Monetisation Pipeline

Source: The Hindu, Indian Express, Livemint and PIB

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.

Objectives:

1. 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.
2. 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:

1. The National Monetisation Pipeline comprises a four-year pipeline from 2022-2025 of the central government’s brownfield Infrastructure Assets.
2. The top three sectors identified for asset monetisation include railways, airports and coal mining. 
3. Besides these, assets such as roads, power transmission lines and gas pipelines will also be part of the monetisation plan. 
4. 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.
5. Hence, the ownership (of assets) will remain with the government and there will be a mandatory hand back after a certain time. 
6. 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 

1. Lack  of identifiable revenue streams in various assets,
2. level of capacity utilisation in gas and petroleum pipeline networks, 
3. Absence of proper dispute resolution mechanism,
4. Regulated tariffs in power sector assets
5. Low interest among investors in national highways below four lanes and 
6. Lack of independent sectoral regulators as potential impediments.