States to implement centre’s asset monetization strategy
ECONOMY & POLICY

States to implement centre’s asset monetization strategy

States that are short on cash may soon adopt the central government's asset monetization strategy to raise money.

The states of Rajasthan, Maharashtra, Odisha, Madhya Pradesh, and Karnataka are among those that have reportedly expressed interest in making money off of their completed infrastructure projects.

These completed projects include the states' completed electricity transmission and road systems. The federal government's asset monetization strategy is modelled on a similar strategy used in Australia.

"The federal government has a Model Concession Agreement (MCA) in place for the monetization of completed projects, and the same may be copied by the states for their monetization push," said Vijay Chhibber, Director General of the Energy Power Transmission Association (EPTA).

Based on the success of such projects by the central government, the public works departments (PWD) in the states will implement the monetization push for state highways and other infrastructure assets.

When asked whether there was enough investor appetite for these projects, Chhibber said, “Global pension funds have shown interest in the completed infrastructure projects.”

The model, according to experts, is a step in the right direction. Reports indicate that the approach did not have the desired level of success in Australia.

In order to raise Rs 10,000 crore through the Infrastructure Investment Trust, or InvIT method, the National Highways Authority of India (NHAI) is preparing for yet another asset monetization drive.

The Securities and Exchange Board of India regulates InvIT, a mutual fund-like investment trust (SEBI). In this exercise in asset monetization, investors fund an InvITe where assets are placed, and the revenue earned from those assets is distributed as dividends.

Along with InvIT, the government also uses the TOT, or toll-operate-transfer, model for asset monetization. As part of an asset recycling scheme, privately owned companies have been granted long-term concessions to use existing National Highways.

The Union Cabinet gave the NHAI permission to create an InvIT and monetize national highway projects in December 2019.

The action was taken to give NHAI the ability to monetize finished national highways that have a history of at least one year of toll collection and it reserves the right to charge toll on the designated roadway.

See also:
L&T to sell 8 roads, transmission project to Edelweiss
Maple Highways completes purchase of NCR expressway


States that are short on cash may soon adopt the central government's asset monetization strategy to raise money. The states of Rajasthan, Maharashtra, Odisha, Madhya Pradesh, and Karnataka are among those that have reportedly expressed interest in making money off of their completed infrastructure projects. These completed projects include the states' completed electricity transmission and road systems. The federal government's asset monetization strategy is modelled on a similar strategy used in Australia. The federal government has a Model Concession Agreement (MCA) in place for the monetization of completed projects, and the same may be copied by the states for their monetization push, said Vijay Chhibber, Director General of the Energy Power Transmission Association (EPTA). Based on the success of such projects by the central government, the public works departments (PWD) in the states will implement the monetization push for state highways and other infrastructure assets. When asked whether there was enough investor appetite for these projects, Chhibber said, “Global pension funds have shown interest in the completed infrastructure projects.” The model, according to experts, is a step in the right direction. Reports indicate that the approach did not have the desired level of success in Australia. In order to raise Rs 10,000 crore through the Infrastructure Investment Trust, or InvIT method, the National Highways Authority of India (NHAI) is preparing for yet another asset monetization drive. The Securities and Exchange Board of India regulates InvIT, a mutual fund-like investment trust (SEBI). In this exercise in asset monetization, investors fund an InvITe where assets are placed, and the revenue earned from those assets is distributed as dividends. Along with InvIT, the government also uses the TOT, or toll-operate-transfer, model for asset monetization. As part of an asset recycling scheme, privately owned companies have been granted long-term concessions to use existing National Highways. The Union Cabinet gave the NHAI permission to create an InvIT and monetize national highway projects in December 2019. The action was taken to give NHAI the ability to monetize finished national highways that have a history of at least one year of toll collection and it reserves the right to charge toll on the designated roadway. See also:L&T to sell 8 roads, transmission project to Edelweiss Maple Highways completes purchase of NCR expressway

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