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Railways, DoT go slow on monetising assets

The government may miss the ambitious Rs 1.62-trillion asset monetisation target for the current financial year by a wide margin, owing to likely slippages in two key sectors — railways and telecom.

According to sources, the ministries of railways and the department of communications (DoT) have scaled down their ambition to raise resources through asset recycling and decided to rely more on self-funding, budget support and debt for their capital expenditure.

The national transporter is also looking at relying less on the private partnership mode for redevelopment of stations and find resources through its own means, including debt, for developing stations in key cities like Delhi and Mumbai.

Also, instead of offering the broadband network to a private player to manage, the DoT may favour BBNL-BSNL to run the network. Monetisation will be limited to leasing out of telecom towers. State-run oil and gas companies have also developed cold feet on monetisation of pipelines. Sources said these firms have also been asked by the parent ministry to look for alternate sources for funds.

Railways (Rs 57,222 crore) and DoT (Rs 20,180 crore) accounted for nearly half of the asset monetisation target for the current financial year.

Last year, a sum of about Rs 1 trillion was raised through the monetisation route. Railways collected just Rs 800 crore via monetisation through redevelopment of Habibganj railway station and some railway colonies in the last fiscal year as against the target of Rs 17,810 crore. The target for railways was to monetise 40 stations in FY22 and permit private trains under PPP model.

According to the National Monetisation Pipeline (NMP), railways need to monetise 120 stations, 30 trains and 1,400 km track, among others in FY23. Both the proposed private trains and station redevelopment schemes did not elicit investors’ interest last year as the terms were not commercially viable. “Preparatory work by railways is slow in this regard to attract private investors. Now, it wants to develop key stations such as Delhi and Mumbai, which have huge monetisation potential, from own budget,” an official aware of the matter told FE.

Similarly, the original plan was to invite private investors to bid for Bharat Broadband Network’s 300,000 km of optical fibre networks to upgrade, operate and maintain across the country, including states such as Haryana and Punjab where the premium could be higher. Now, there is rethinking on this by the DoT.

Sources said the DoT is now favouring a hybrid annuity model (HAM) for BharatNet, reducing the scope for monetisation. Of the telecom target, Rs 15,780 crore was estimated to come from BharatNet fibre monetisation. Another Rs 4,400 crore was estimated from BSNL/MTNL tower monetisation through rent-operate-transfer (ROT) concession model, which could materialise if processes are fast-tracked.

Issues affecting monetisation pipelines are likely to be discussed when the finance ministry reviews the progress soon. “With some of the existing components showing not much progress, the government has to initiate steps to list additional assets at the earliest to bridge the likely shortfall in monetisation target,” another official said.

Monetisation of natural gas and petroleum product pipelines were projected to fetch `9,176 crore in FY23. However, oil and gas companies are not keen on monetising their pipelines. These companies have been asked to identify alternate assets such as storage infrastructure and joint venture businesses for monetisation.

On the upside, at least Rs 30,000 crore is expected in premiums to state governments from mining as well as in investments in mineral and coal blocks in FY23 as against a target of about Rs 6,060 crore set for the year.

Around Rs 30,000-38,000 crore is expected from the securitisation of toll receivables from expressways such as Delhi-Amritsar-Katra, Infrastructure Investment Trusts (InvITs) and Transfer-Operate-Transfer (ToT) models as against a target of Rs 32,855 crore for the next financial year.

Even though not factored in the NMP estimate, the Ashoka Hotel lease and development of vacant plots could generate Rs 7,000-8,000 crore monetisation value in terms of upfront accruals and investment. However, the transaction may not be completed within the current financial year.

After the government unveiled the NMP in August 2021, this ambitious project to boost non-debt capital in the government sector got off to a quick start. Despite railways achieving very little, revenues/investments mobilised via this route was about Rs 1 trillion compared with the target of Rs 88,200 crore for FY22, the first year of the NMP. Coal and mineral mines (i.e., iron ore, bauxite and copper) auction contributed about Rs 58,000 crore, as against an annual sectoral target of just Rs 3,394 crore, helping the Centre achieve the FY22 target.

The NMP seeks to generate upfront revenues/investments of Rs 6 trillion in four years starting FY22, out of operational infrastructure projects, under various innovative long-term lease plans that don’t require the government to cede ownership of the assets much. Financial Express

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