Senior government officials said that the new asset monetisation programme will hinge on a two-pronged strategy. One involving strategic sale of loss making and defunct PSEs sitting on large tracts of land that could be commercially utilised.
The second part of the strategy will be to get even existing profit making PSEs such as ONGC, NTPC, SAIL, BHEL, Airports Authority of India (AAI), PowerGrid, to sell some of their non-core assets, including manufacturing units and surplus land to realise funds that could be invested in new projects where private investments is not forthcoming.
The government will benefit from such exercise as portion of gains from such sale by PSUs will be recouped to it by way of higher dividend pay-out. Also, it will receive a portion of the commission charged by state-run construction company NBCC Ltd that may get mandate to auction some of the PSU assets. DIPAM has also sought Expression of Interests (EoI) from international property consultancy firms to offer advisory services in its CPSE land and building asset monetisation drive.
“There are huge tracts of land in prime areas that could realise good commercial value on sale. Some of the land parcels are with loss making and defunct PSEs that could offer good revenue to the government under the strategic sale route. A portion of this land can also be used for making affordable housing for poor,” said a government official asking not to be named.
“Though the asset monetisation scheme was announced in 2016, it never took off due to differences over the scale and end use of such assets. Moreover, the earlier plan weighted heavily on involving NBCC to facilitate quick monetisation of assets. But this was not the right path to take,” the official added.
The renewed focus on asset monetisation this year will active participation of both NBCC and international property consultants and other consultants selected through a competitive bidding process. On its part, DIPAM and Niti Aayog, the government’s think-tank, have already started the exercise to identify projects that would be put up under the scheme. The consultants would assess their valuation and decide on a mechanism to sell them.
The plan could take up land parcels such as surplus land available with NTPC on its now closed Badarpur power plant in Delhi. Though an eco-park is proposed over 884 acre of land, sources said some way to commercialise extract the prime land could be explored. Also, erstwhile Videsh Sanchar Nigam Ltd’s (VSNLs) surplus land measuring 773.13 acres located at five locations in four cities, namely, Pune, Kolkata, New Delhi and Chennai could also be put up under asset monetisation.
Last year, the National Company Law Tribunal (NCLT) had approved a scheme which cleared the way to de-merge surplus land of nearly 773 acres from Tata Comm that bought VSNL in an earlier disinvestment round, settling a 16 year old matter.
At a meeting of officials from DIPAM, Niti Aayog, oil ministry and other departments recently, a decision has been taken to monetise non-core assets of ONGC and BPCL. This will involve sale of the sports club owned by Bharat Petroleum Corporation Limited (BPCL) in Chembur, Mumbai and few of the golf courses of ONGC with priority sale of two at Ahmedabad and Vadodara being located on prime land. ONGC also owns a few more golf courses — in Ankleshwar (Gujarat), Rajahmundry (Andhra Pradesh) and one in Assam.
Moreover, six CPSEs, including IDPL, HMT, Hindustan Antibiotics, Scooters India and Tungabhadra Steel Products, have more than 3,000 acres of prime land that may be monetised. The entire sale proceeds from these loss-making entities would flow to the Centre. Huge land parcels are also available with Port Trusts.
The whole plan on asset monetisation is being finalised based on its success in the highway sector where National Highway Authority of India (NHAI) has been successful in getting good investor interest in some of its operational road projects. In fact, Niti Aayog has favoured reverse BOT (build, operate and transfer) model for all state-run infrastructure projects so that these projects are sold out and allowed to be run by the private sector.
While the government seems determined to move ahead with its innovative idea that found its place first in then Finance Minister Arun Jaitley‘s budget speech of 2016, a few PSU heads are not comfortable with the idea to hand over projects build with their sweat on a platter to the private sector.
“We should look at finding buyers for some of our idle and deadwood projects rather than handing over those where PSUs have worked hard to get clearances and create a market,” said a PSUs head not wishing to be named.
NTPC is already looking at selling or closing down some of its old power plants that have depleted value for it. For SAIL, the plan is to identify private sector investors for its loss-making units.