Government's asset monetisation programme expected to be primary focus of Budget 2019-20
The Budget 2019-20 may likely see a big boost to the government's asset monetisation programme that is concerned with development and sale of surplus land parcel and other non-core assets of public sector enterprises in order to mobilise additional resources to bring the slowing economy back on track.
According to senior government officials, the new asset monetisation programme will rely on a two-pronged strategy. One will deal with strategic sale of inoperative PSEs which currently own large tracts of land and can be commercially used.
The other part of the strategy will be to persuade profit making PSEs such as ONGC, NTPC, SAIL, BHEL, Airports Authority of India (AAI), PowerGrid etc. to sell their non-core assets, which will involve manufacturing units as well as surplus land to realise funds that could be invested in new projects where private investments is not forthcoming.
The government is expected to gain from such plan as a portion of the profits from the sale by PSUs will be retrieved by means of higher dividend pay-out. It is also going to benefit from a part of the commission charged by state-run construction company NBCC Ltd that may receive a directive 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," a government official said asking to remain anonymous.
The official added, "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".
Government's think-tank, DIPAM and NITI Aayog have already started to work on the identification of projects that are likely to be included under the scheme. Both NBCC and international property consultants and other consultants selected through a competitive bidding process will actively participate in this exercise as an outcome of renewed focus on asset monetisation. The consultants would assess their valuation and decide on a mechanism to sell them.
Asset monetisation may obtain surplus land available with NTPC's Badarpur power plant in Delhi. Though an eco-park is proposed to be developed over 884 acres of land, the government is still exploring ways to commercialise the land. 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 taken up under asset monetisation.
The National Company Law Tribunal (NCLT) had approved a scheme last year which gave way to de-merge the surplus land of nearly 773 acres from Tata Comm that bought VSNL in earlier disinvestment round, settling a 16-year-old matter.
A decision to monetise non-core assets of ONGC and BPCL has been taken at a recently conducted meeting of officials from DIPAM, Niti Aayog, oil ministry and other departments. The sale will include sports club owned by Bharat Petroleum Corporation Limited (BPCL) in Chembur, Mumbai and some golf courses of ONGC with priority sale of two at Ahmedabad and Vadodara being located on prime land. Other golf courses owned by ONGC include the ones located in Ankleshwar (Gujarat), Rajahmundry (Andhra Pradesh) and in Assam.
The asset monetisation also plans to take up more than 3000 areas of prime land available with seix CPSEs, including IDPL, HMT, Hindustan Antibiotics, Scooters India and Tungabhadra Steel Products. The sale proceeds from these loss-making entities would go to the Centre. Port Trusts also acquire huge land parcels.
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.
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