Centre leans on states to put asset monetization on track

As part of the playbook, the Union power ministry has already issued guidelines for monetization of transmission assets, and other ministries are expected to follow suit.

“Ministries in the union government may provide knowledge-based support and asset-specific guidance to states in order to help states carry on the asset monetization process,” said an official aware of the development.Another official said NITI Aayog has undertaken several state-specific workshops and would also organize a national workshop on monetization.

As per the plan, the Centre and NITI Aayog will initially focus on asset monetization in six states—Gujarat, Maharashtra, Karnataka, Odisha, Madhya Pradesh and Uttar Pradesh. The potential assets to be monetized will include state highways, expressways, power transmission network, urban bus terminals and warehouses. Assets owned by states are currently being identified for monetization in consultation with NITI Aayog.

Queries sent to the NITI Aayog and Department of Public Enterprises remained unanswered till press time.

The NMP also stresses on the need for monetization of state government assets.

The Centre has undertaken several initiatives to address the challenges faced by asset owners in undertaking monetization and to incentivize state governments and state-level entities in undertaking monetization.

Under the Centre’s incentive scheme for capital expenditure by states, the government incentivizes states to spend more on infrastructure and to sell stakes in their public sector enterprises through minority stake sales or listings along with monetization of assets.

The Centre has allocated ₹5,000 crore for incentivizing states in lieu of monetization.

The focus on asset monetization in states comes in the backdrop of limited offtake of the incentive for monetization by states in the current fiscal year, said the officials cited above.

The asset pipeline of the NMP prepared by the NITI Aayog notes that state governments, state-level entities and urban local bodies also have a sizeable infrastructure asset-base with significant monetization potential. “Prominent asset classes thereunder include state highways, energy distribution infrastructure, intrastate transmission networks, urban transport, bus depots, water supply & sewerage networks, gas pipelines (in certain states), sports stadium and district level sport complexes etc,” it said.

In October last year, the ministry of power issued guiding principles for the monetization of transmission assets in the public sector through an acquire, operate, maintain and transfer (AOMT)- based public private partnership model.

Noting that state-run Power Grid Corporation of India had monetized more than ₹7,700 crore in May 2021 by monetizing five of its transmission assets through infrastructure investment trust (lnvlT), the ministry said states also have a significant potential for monetization of their transmission assets, so that the much-needed capital for creation of transmission assets in the states is available.