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Privatization of Pipeline and Tower Businesses as Govt readies Plan for Asset monetization

Indian Government has proposed Asset Monetisation for PSU's
Indian Government has proposed Asset Monetisation for PSU's

In its second wave of asset monetization the inter-ministerial committee states on hiving off GAIL and BSNL to private players in lease.

An inter-ministerial committee chaired by NITI Aayog CEO Amitabh Kant has recommended a second list of PSU assets which the government seeks to lease out to private investors. This is in regard to the raising fresh resources for fresh investment by the government by the process of asset monetization.

The inter-ministerial committee also comprised of the Finance Secretary and Secretary, Department of Investment and Public Asset Management (DIPAM).

State-owned ATMs, pipelines of GAIL and mobile towers of BSNL and MTNL shall be given out on lease to private companies.

The first round of the meetings had a list of 19 assets which had been approved for monetization by the government. The list included 12 sports stadiums, five of Sports Authority of India, two of ONGC, one of BPCL in Mumbai, one of RINL in Visakhapatnam, NTPC’s Badarpur Thermal Power Plant in Delhi, ITDC’s Ashoka Hotel in Delhi, and four mountain railway properties.

The list also included 18 central government holiday homes across India.

The ownership shall remain with the government, the property to be leased on a long term basis to private players.

An official stated that “To beat the slowdown, we need the private sector to restart investment. If PSUs start spending, it will give confidence to the private sector to make fresh investments, which can set in motion a virtuous cycle of investment”.

While GAIL network has a capacity to handle around a volume of 206 MMSCMD(million metric standard cubic metres per day) in the last financial year only 105 MMSCMD transmissions had been made.

The BSNL network has been leasing out in small amount which needs to be heightened to such an extent. An official stated “The money raised by leasing such a large tower network can be used to at least pay back the small and medium enterprises to which BSNL owes significant sums. The government need not provide funds from the Budget for this,” said an official.

Even the process of leasing out state-owned ATMs has been long initiated. This is due to the vast network of state-owned ATMs.

The cabinet had recently handed the airports of Ahmedabad, Lucknow and Mangaluru on a public-private partnership to the Adani Enterprise. The company shall be carrying out the operations, management and development of the respective airports for the next 50 years.

Nine projects of the National Highway Authority of India (NHAI) have already been given to Australian capital fund manager Macquarie. The company had offered an upfront payment of Rs 9,400 crore.

The company Macquarie shall collect toll, and operate and maintain these projects for 30 years. The assets shall be handed back to the NHAI after the prescribed period.

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