National monetisation pipeline –
NMP, Is recently Launched by Nirmala Sitarman Union Minister for finance and corporate affairs, The NMP estimates monetisation Potential of Rs 6 lakh crores through core assets of the central government over a four year period from 2022 to 2025, beside providing visibility NMP will also serve medium term road-map for the asset monetisation of the government Pipeline monetisation simply means increasing profit through unlocking the unutilized potential to increase the capacity utilisation. [brownfield is an property which has the expansion, redevelopment, and reuse of which may be complicated by the presence or potential presence of a hazardous substance.]
The another Aim is to unlock the value in brownfield project by engaging it to the other private sector by transferring them to the revenue rights also using the funds which will be raised by the government across the country.
The NMP is also created to aggregate the information which is provided by the various stakeholder including the minister, departments as well the assessments of secondary information which is available on existing infrastructure assets in each of the sector.
NMP had announced that the clear framework for the monetisation and to give the investor a ready list of assets to generate investment interest.
The central government will be the part of this project
Currently only assets of the central government, The Ministries and the Central public has been included in this project, the government is stressed that these brownfield assets which have been de-risked from execution risk and therefore should encourage the private investment.
There are going to be challenge like lack of identifiable ,
Traffic in power sector low interest among investors in national highways below four lanes. Even the governor has also tried to address all of these challenges in the NMP framework, as the execution of the plan remains key to its success.
Under the circumstances, ambitious the government has decided that 13 sector like airport, railways, roads, gas, petrol pumps and many more will be privatized by the government for brownfield infrastructure assets.
Roads, railways and power assets which is going to be comprise the 66% of the total estimate value of the assets
The another aim is to unlock the value of the brownfield project by engaging to its private sector by transferring them into the revenue rights rather then the ownership projects.
The main objective of NMP is to serve the medium term road map for minister and agencies the word monetisation means converting any goods into money, and by converting it into the project its going to be beneficial for government as well local, To provide the government a platform for the minister to track assets performance.
The asset monetisation is not new to India, India has already faced the PPP public private partnership monetisation in 2012
The transaction of monetisation, for the government is basically transferring all the revenue rights for a private parties for specified transaction period in return for upfront money, a revenue share,
and commitment of investment in the assets, the assets which has been underutilised will be monetised in this project.
The nation will build this assets over last 70 years by using public fund, Government will give this assets to the private company and will earn rent for the upcoming 40 years. This may also lead to the higher price which mostly is going to be faced by locals.
other objective of this program is to create a win tag for all stakeholders including public authority, private investors and most of all the common citizen through universal access to high quality and affordable infrastructure. these assets can also be commonly use to referred asset or capital recycling, is globally a widely used business practice. The consistent has limited period transferred of performing assets to unlock “idle” capital and by reinvesting it in other assets or projects that deliver improved or the additional benefits. Governments and public sector has different organizations, which has its own and which operate such assets and are going to be primarily responsible for delivering these infrastructure services, To adopt this concept to meet the increasing needs of its population to improved quality of the public assets and their service.
The monetisation is also be undertaken through a rough range of instruments with the help of the/ tools broadly categorised into two approached Direct Contractual Approach such as PPP Concessions, and the other one is Structured Financing models such as Infrastructure Investment Trust (Invit), Real Estate Investment Trust (REIT).
The top 5 sector capture 83% of the aggregate pipeline value
The 5 sector include road , railway, telecom ,gas pipeline, oil , power
This assets are the indicative value of lakhs Crore will be rolled out in the current financial year .
However this aggregate will be under the actual value of public assessment also depending on timing, transaction , investor interest, structure and etc. Overall strategy shares that's the assets base will remain with the government.
Pipeline can help in monetising underutilised core assets. All this money can also be used for the National Pipeline, and thus it can improve the country's infrastructure and can create plenty of jobs as well.