National Monetisation Pipeline (NMP)

In News

• Recently, the Centre has completed transactions worth Rs 96,000 crore under the National Monetisation Pipeline (NMP) in 2021-22, surpassing the ambitious programme’s first-year target of Rs 88,000 crore.

Major Highlights of the Achievements 

• Ministry of Coal:
  • In Financial year 2022, the Ministry of Coal was the biggest contributor to the asset monetisation pipeline, generating a monetisation value of about Rs 40,000 crore through the auctioning of 22 coal blocks and awarding MDO contracts, the official said.
• Mineral mining assets: 
  • It achieved an estimated monetisation value of Rs 18,700 crore in FY22 after the completion of 31 mineral blocks auctions.

• The Ministry of Road Transport and Highways:
  • It achieved an overall monetisation value of about Rs 23,000 crore.
  • In FY22, close to 390 kilometres of roads were monetised under the Infrastructure Investment Trust (InvIT) mode and three Toll Operate
• The Ministry of Power : 
  • It reported a monetisation achievement of Rs 9,500 crore after state-owned transmission major Power Grid Corporation undertook the monetisation of its first batch of transmission assets using the InvIT model. 
    • Apart from that, the National Hydroelectric Power Corporation (NHPC) also completed securitisation of one of its operational hydel assets raising about Rs 1,000 crore.

• New models such as InViTs (Infrastructure Investment Trusts), REITS (Real Estate Investment Trusts) and public-private partnership models such as the toll-operate-transfer (TOT) in the roads sector and Mine Developer and Operator (MDO) contracts in the coal sector proved instrumental in the targets being met.
  • The target for 2022-23 fiscal was fixed at Rs 1.67 lakh crore at the meeting.

Unachieved Targets 

• Some ministries lack the technical expertise to put their monetisation plans in action .
• The underperformance of railways assets was also discussed at the review meeting as it could achieve a monetisation value of only Rs 800-900 crore against a target of Rs 17,810 crore. 

About National Monetisation Pipeline:

• The pipeline has been developed by NITI Aayog, in consultation with infrastructure line ministries, based on the mandate for ‘Asset Monetisation’ under Union Budget 2021-22. 
• NMP estimates aggregate monetisation potential of Rs 6.0 lakh crores through core assets of the Central Government, over a four-year period, from FY 2022 to FY 2025.
• It aims to unlock value in brownfield projects by engaging the private sector, transferring to them revenue rights and not ownership in the projects, and using the funds generated for infrastructure creation across the country. 
• Framework
  • The pipeline has been prepared based on inputs and consultations from respective line ministries and departments, along with the assessment of total asset base available therein. 
    • Monetization through disinvestment and monetization of non-core assets have not been included in the NMP. 

• The framework for monetisation of core asset monetisation has three key imperatives.

Estimated Potential

• Sector wise Monetisation Pipeline over FY 2022-25 (Rs crore)

• The top 5 sectors (by estimated value) capture ~83% of the aggregate pipeline value.
  •  These top 5 sectors include: Roads (27%) followed by Railways (25%), Power (15%), oil & gas pipelines (8%) and Telecom (6%).
• In terms of annual phasing by value, 15% of assets with an indicative value of Rs 0.88 lakh crore are envisaged to be rolled out in the current financial year (FY 2021-22). 

Expected Benefits of the Scheme

• Innovative way of Private Participation:
  • Private sector is well known for its efficiency and technology.
  • NMP will provide a way to exploit the strength of the Private sector for infrastructure creation without transfer of ownership.
• Ensure Further investment in Infrastructure Building:
  • It will help to properly monetise under utilised brownfield projects
• Revival of the economy and create sustainable demand.
• Spillover effect of infrastructure is high on cycle of demand

• It will create further value for infrastructure creation in the country 

• It will enable high economic growth and seamlessly integrating the rural and semi-urban areas for overall public welfare

Key Challenges

• Lack of identifiable revenue streams in various assets, 
• Level of capacity utilisation in gas and petroleum pipeline networks, 
• Dispute resolution mechanism, 
• Regulated tariffs in power sector assets, and 
• Low interest among investors in national highways below four lanes, according to the NMP framework. 
• Analysts also point to issues such as the lack of independent sectoral regulators as potential impediments.

Conclusion

• Asset Monetisation needs to be viewed not just as a funding mechanism, but as an overall paradigm shift in infrastructure operations, augmentation and maintenance considering the private sector’s resource efficiencies and its ability to dynamically adapt to the evolving global and economic reality. 
• New models like Infrastructure Investment Trusts  & Real Estate Investment Trusts will enable not just financial and strategic investors but also common people to participate in this asset class thereby opening new avenues for investment.

Source:IE