Amid political opposition and skepticism regarding the Rs 6 lakh crore asset monetization plan, Niti Aayog CEO Amitabh Kant is confident of reaching the target and promises that consumers will be protected in sectors such as electricity and that the transfer of assets will be through well-defined structured contracts. Extracts:
How is asset monetization NMP different from privatization, from sale?
The modality and principles of asset monetization listed in the NPM clarify its clear distinction between privatization and sale.
In the event of privatization or sale of assets, the private sector is the sole owner of a business or asset, enjoying full autonomy over the future sale of those assets, without any control or oversight on the part of the party. government on the universal availability of services, affordability to consumers and standards of service delivery.
In the event of sale or privatization, the private developer holds the asset in perpetuity with no possibility of repurchase or restitution of the assets.
For the mechanisms proposed under the NPM, the monetization of assets is done through structuring contractual partnerships, like the public-private partnership projects carried out for nearly 20 years in the country.
Well-defined contractual frameworks ensure that challenges are addressed, including the protection of the interests of the public and ordinary citizens.
How confident are you of reaching the annual target, especially this year?
Since the announcement of the “Asset Monetization” program in the 2021-22 budget, Niti Aayog has been working with the Ministries of Infrastructure and the Ministry of Finance.
Extensive consultations were undertaken with key stakeholders – owners of public assets, private investors to prepare a realistic roadmap for the program keeping intact the principles of public welfare, empowerment of vulnerable sections and development. socio-economic at the heart of the exercise. The NMP, which was only prepared for 4 to 5 months, was the first step.
Work to deploy the assets initially identified has already been initiated by certain ministries. Among the assets identified for FY2022, PowerGrid launched its first public sector InvIT, raising Rs 7,700 crore. NHAI has also filed its draft offer document with the regulator and is currently at an advanced stage of the transaction.
Various other sectors such as gas pipelines, railways, ports, airports are at advanced stages of approval or tendering. We are therefore confident of achieving our objectives for the current and future years.
In sectors like electricity, how are you going to ensure that individuals who come do not overload consumers?
The ultimate objective of the “Asset Monetization” program is to create a win-win situation for all stakeholders, including public authorities, private investors and above all the ordinary citizen, through universal access to high-quality infrastructure. quality and affordable.
In accordance with this guiding principle, the monetization of assets under the NPM is envisaged in the form of structured contractual partnerships. The transfer of rights / assets will be defined by a clear contractual framework, which, in line with the principles of the model concession frameworks for PPP projects, will ensure standards of service delivery, consumer protection and regulation / tolerance, to the extent where they are applicable to a sector.
Why is there a reluctance to sell hotel assets en bloc?
The assets identified under the NPM should be deployed through a range of instruments. Specifically for hotel assets, the NMP report identified models such as PPP concession, long-term leasing, and divestment, among others.
While the government is committed to its policy of ensuring a minimum presence in non-strategic sectors, the divestiture of all these assets may not be possible. This is due to multiple factors such as location, use as well as the preservation of generational equity in assets such as land, whenever deemed necessary. There, there is no single model for all concepts.
Is NPM an exercise to close the budget deficit?
The strategic objective of the asset monetization program is to unlock the value of investments in public sector assets by harnessing the capital and efficiency of the private sector, which can then be harnessed for scaling up / creating infrastructure completely new.
If one of the objectives is to improve the budgetary margin through innovative financing alternatives, this is not an end in itself. It is in fact a comprehensive strategy to (i) bring about a paradigm shift in the operation and maintenance of infrastructure and increase (ii) the creation of investment alternatives in infrastructure for institutional investors such as that insurance funds, pension funds, sovereign wealth funds (iii) investors to invest in specialized infrastructure assets through instruments such as InvIT.
How confident are you in the interest of investors in such diverse sectors?
Given that the assets targeted under the NMP are risk-free brownfield assets with a stable income generation profile, I am reasonably confident in the interests of investors.
Additionally, with the potential for monetization through capital market instruments such as InvIT etc. I think this is the right time to initiate trades around such models, in order to ensure maximum stacking. The key here is the right structure, the balanced risk-sharing framework and the flexibility to deploy innovative business models.
Do you see the implementation as a huge challenge to meet deadlines?
Implementation is a critical aspect of NPM given the imperative of optimal structuring, the time required for approvals and authorizations, as well as aspects such as ensuring the timing of transactions, etc.
Successful implementation of NPM therefore depends on an effective governance framework with an escalation matrix for real-time monitoring of progress. It therefore requires streamlining frameworks and modalities in a way that can be easily operationalized, adopted and replicated.
The program will be monitored through the Asset Monetization Dashboard, as foreseen in the Union budget 2021-2022. The government, as part of a multi-level institutional mechanism, has formed a small group of secretaries empowered to monetize assets (CGAM) under the chairmanship of the Cabinet
Secretary for the overall implementation and monitoring of the program.


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