government’s most ambitious monetization program It has started with leasing out over 2,229 km of gas pipelines to private sector limited state-owned natural gas company GAIL, reports business daily Livemint. As far as the Centre’s plans are concerned, the Center is looking at monetizing GAIL’s 8,154 km of pipelines. This is the first step under the National Monetization Pipeline which was announced by the Union Minister. Nirmala Sitharaman few days back.
The decision to monetize the GAIL pipeline was taken keeping in mind the demand of private investors. To execute this transaction, investment advisors are already being appointed by the Center for the targeted transactions. And this transaction has received initial expression of interest from domestic and international banks. To monetize GAIL’s pipeline, the government is going ahead with the InvIT model, which is an investment vehicle like a mutual fund, which funds the project and takes a part of the proceeds as return. InvIT is an innovative mechanism through which the investor invests in these assets without any dues. Other methods of monetization approach are basically user fee-based.
Several media reports are saying that the government is likely to lease out the National Optical Fiber Network, also known as BharatNet, and power transmission lines, after monetizing the GAIL pipeline. According to NITI Aayog, GAIL’s existing gas pipeline network is 13,389 km, with a capacity of 204 million standard cubic meters per day (MMSCMD).
The Rs 6 lakh crore national monetization pipeline aims to mobilize resources from the untapped and idle resources of the government. From a technical point of view, this pipeline aims to unlock value in brownfield projects by involving the private sector. The money thus generated will finance the National Infrastructure Pipeline which envisages infrastructure investment of Rs 111 lakh crore over five years from 2020-2025.
Launching the NMP, Sitharaman said that it will generate employment opportunities, which will enable higher economic growth. The plan is in line with Prime Minister Narendra Modi’s strategic disinvestment policy, under which the government will maintain a minimum presence in strategic sectors, however, in non-strategic sectors, the government will either shut down or privatize all CPSEs. The government has currently set a disinvestment target of ₹1.75 trillion for FY22. Sitharaman had also announced the privatization of two banks and an insurance company in this year’s budget.
On Friday, former Union Finance Minister P. Chidambaram launched a scathing attack on the Centre’s National Monetization Pipeline (NMP), saying the Congress party’s strategy of monetizing non-core, loss-making assets while in power is the opposite. What does the Narendra Modi-led government propose to do under the National Monetization Pipeline. Addressing a press conference, Mr Chidambaram said that the Congress has never sold strategic assets. “We have always ensured that there is no monopoly in monetization as we have selected assets based on criteria,” he said.
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