Explained: National Monetisation Pipeline Comprising ₹6 Lakh Crore Brownfield Infrastructure Assets Of Centre And PSUs Set To Be Monetised

Union Minister for Finance and Corporate Affairs Nirmala Sitharaman, on Monday (23 August), launched the National Monetisation Pipeline (NMP) comprising brownfield assets nearly worth ₹6 lakh crores belonging to central ministries and public sector entities that will be earmarked for monetisation till FY 2025.

National Monetisation Pipeline (NMP) was first announced in the Union Budget 2021-22, and NITI Aayog was entrusted with the mandate to develop National Monetisation Pipeline. NITI Aayog, in consultation with 13 infrastructure line ministries, prepared the asset monetisation pipeline that was unveiled today by the FM Nirmala Sitharaman.

As part of the NMP, the union government has made available a pipeline of attractively structured, brownfield assets that would be leased out to private investors for upfront or periodic consideration. A well-defined concession/ contractual framework will define the transfer of such rights in lieu of an upfront/ periodic consideration.

The strategic objective of the asset monetisation programme is to unlock the value of investments in public sector assets by tapping private sector capital and efficiencies, which can thereafter be leveraged for augmentation/ greenfield infrastructure creation.

"By bringing in private participation, we are going to monetise it (assets) better and with whatever resource that you obtained by monetisation, you are able to put in for further investment into infrastructure building," FM Nirmala Sitharaman said. She added that the NMP will help improve liquidity to increase expenditure in infrastructure by the government.

While traditional sources of capital are expected to finance 83–85% of the ₹111 lakh infrastructure expenditure committed under the National Infrastructure Pipeline (NIP) over five years, around 5.4% of the total NIP funding is expected to be mopped up through asset monetisation.

NMP has been planned to be a co-terminus with the remaining four-year period of the National Infrastructure Pipeline (NIP).

NMP lists brownfield assets with an aggregate monetisation potential of ₹6 lakh crore, which will be available for lease/licensing to private investors over four years, from FY 2022 to FY 2025. For the current fiscal, the target is ₹88,000 crore

83 per cent of the assets proposed to be monetised will be in five sectors: Roads (27 per cent) followed by Railways (25 per cent), Power (15 per cent), oil & gas pipelines (8 per cent) and Telecom (6 per cent). Roads and Railways together will contribute 52 per cent of the total NMP value.

The assets and transactions identified under the NMP are expected to be rolled out through various instruments. The sector will determine the choice of instrument, nature of the asset, timing of transactions (including market considerations), target investor profile and the level of operational and/or investment control envisaged being retained by the asset owner.

In terms of annual phasing by value, 15% of assets with an indicative value of ₹0.88 lakh crore are envisaged to be rolled out in the current financial year, i.e. FY 21-22.

Road Sector

The aggregate length of assets considered for monetisation in the road sector over FY 2022 to 2025 is estimated to be 26,700 km. The total length of highway assets considered for monetisation (26,700 km) constitutes nearly 22 per cent of the entire National Highways (estimated to be about 1,21,155 km), excluding the network operated by the private sector under BOT (Toll) based PPP concessions.

As an asset class, the Roads and highways have already monetised operating road assets and have generated growth capital for the construction of new roads under programs like the Bharatmala program.

Since 2017, the NHAI has successfully monetised its brownfield road assets through Toll Operate Transfer (TOT)-based PPP concessions. The TOT model has since matured and is now an established model with a model concession framework already in place.

Another method of monetisation that has seen traction in the recent past is the InvIT model. Several road assets have been monetised through InvITs by private sector players.

The government hopes to garner ₹1,52,496 crore by monetising railways assets over the NMP period FY2022-25.

Railway Sector

Indian Railways (IR) with 121,407 km of total track over a 67,368 km route. offers enormous potential for asset monetisation

The key railways' assets that will be monetised includes 400 railway stations, operations of 90 passenger train, 673 KM of Dedicated Freight corridor.

The government hopes to garner ₹1,52,496 crore by monetising railways assets over the NMP period FY2022-25.

Airport Sector

As per the NMP document, 25 major AAI airports are considered for monetisation over FY 2022-25.These airports include Udaipur, Dehradun, Indore, Ranchi, Coimbatore, Jodhpur, Vadodara, Patna, Vijaywada and Tirupati.

While smaller airports like Bhubaneswar, Varanasi, Amritsar, Trichy, Indore and Raipur is planned to be monetised in the current fiscal, monetisation of bigger ones like Chennai and Vadodara is expected in 2023-24 fiscal.

Calicut, Coimbatore, Madurai, Jodhpur are among the eight airports listed for monetisation in 2022-23 fiscal, while Dehradun, Agartala and Udaipur will be taken up in the last phase in 2024-25 fiscal.

Power Generation Sector

For the power sector accounts for the largest share of investments in infrastructure, assets considered for monetisation over FY 2022-25 aggregate to 6.0 gigawatt (GW). Out of which, about 3.5 GW is from hydel assets and about 2.5 GW is renewable energy (RE) assets which includes solar and wind. The total value of assets considered for monetisation is estimated at ₹39,832 crore over FY 2022-25, the NMP document said.

Together, 6.0 GW asset base considered for monetisation constitute about ~6% of total generation capacity under central PSUs. Key entities whose assets have been considered include NHPC, NTPC & SJVNL who own bulk of the hydel assets and NTPC (under Ministry of Power) and NLC (under Ministry of Coal) that own renewable assets.

Telecom Sector

The government expects to realise ₹35,100 crore from the partial sale of Bharatnet fibre assets and around 13,500 mobile towers owned by state-run telecom firms as part of its national monetisation pipeline released on Monday.

Niti Aayog has valued over 2.86 lakh kilometre of optical fibre assets laid by BBNL and BSNL under rural broadband project Bharatnet at ₹26,300 crore, according to the National Monetisation Pipeline NMP document.

Sports Stadiums, Warehouses And Urban Real Estate

Monetising two national stadiums, including the Jawaharlal Nehru Stadium in New Delhi, and an equal number of regional centres (at Bengaluru and Zirakpur) under NMP is estimated to yield ₹11,450 crore.

Redevelopment of seven residential colonies in Delhi, including those at Sarojini Nagar and Nauroji Nagaras as well as development of residential/ commercial units on 240 acres of land in Ghitorni in Delhi has also been identified to garner ₹15,000 crore.

Close to ₹29,000 crore is estimated from monetising warehouses.