The government’s most ambitious monetisation programme has started with leasing out more than 2,229 km of gas pipelines of state-owned natural gas company GAIL limited to the private sector, the business daily Livemint reported. As far as the center’s plans are concerned, the centre is mulling to monetise 8,154 km of GAIL pipelines. This is the first move under the National Monetisation Pipeline which was announced by the Union Minister Nirmala Sitharaman few days back.
The decision to monetise GAIL pipeline was taken after taking into consideration, the demand from the private investors. For carrying out this transcation, investment advisors for the purposed trasaction are already being appointed by the centre. And this transaction has recieved initial expression of interest from domestic and international banks. To monetise the GAIL’s pipeline, the government is going ahead with InvIT model, which is an investment vehicle just like mutual funds, that funds the project and take away a portion of income as a return. InvIT are the innovative mechanism through which the investor invests in these assets without owing them. The other modes of monetisation approaches are basically user fee-based.
Many media reports are saying that the government is likely to lease out National Optical Fibre Network, also known as BharatNet, and the power transmission lines, after the monetisation of GAIL pipeline. According to Niti Aayog, GAIL has an existing gas pipeline network of 13,389km, with a capacity of 204 million standard cubic metres per day (mmscmd).
The national monetisation pipeline of worth Rs 6 lakh crore, aims to mobilise resources from the governments underused and defunct resources. In technical terms, this pipeline aims to unlock value in brownfield projects by engaging the private sector. The funds so generated will finance the National Infrastructure Pipeline that envisages an infrastructure investment of Rs 111 lakh crore over five years from 2020-2025.
Sitharaman while launching NMP said that this will create employment opportunities, thereby enabling high economic growth. The plan is in consonance with Prime Minister Narendra Modi’s strategic divestment policy, under which the government will maintain a bare minimum presence in the strategic sectors however in the non-strategic sectors, the government will either shut down or will privatise all the CPSEs. The government has currently set Rs 1.75 trillion divestment target for FY22. The sitharaman in this year’s budget also announced the privatisation of two banks and one insurance company.
On Friday, Former Union finance minister P. Chidambaram launched a scathing attack on the Centre’s National Monetisation Pipeline (NMP), saying that the strategy of Congress party to monetise non-core, loss-making assets when in power, is in stark contrast to what the Narendra Modi-led government proposes to do under the National Monetisation Pipeline. Addressing a press conference, Mr. Chidambaram said the Congress never sold off strategic assets. “We always ensured that there is no monopoly in monetisation as we chose assets based on criteria,” he said.
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