The Power Ministry has floated guiding principles for State governments to identify and monetise brownfield transmission assets in a bid to scale up power sector infrastructure.

The rationale is that States have significant potential for asset monetisation by leveraging brownfield transmission projects and mobilising proceeds for new infrastructure projects, boosting their economic prospects. It suggested the Acquire, Operate, Maintain and Transfer (AOMT) based Public Private Partnership model.

This comes after the Centre monetised Power Grid’s (PGCIL) five transmission projects in May last year, raising more than ₹7,700 crore. For this, PGCIL had set up an InvIT (PowerGrid Infrastructure Investment Trust, or PGInvIT) in January 2021. In FY22, PGCIL raised ₹8,370 crore through monetisation and the target for FY23 is ₹6,860 crore.

As of March 2020, India’s total transmission line length network stood at around 7,13,400 circuit kms (66 kV). “Brownfield seasoned transmission assets in particular have demonstrated significant investor appetite from long-term institutional investors owing to underlying asset characteristics and availability-based business model as evidenced by successful InvlT based monetisation for transmission assets in public as well as private sector,” Power Ministry said.

AOMT model

Under the AOMT model, the SPV, which will own the transmission asset, is bought by the selected investor for a prescribed time with associated rights and duties against payment of upfront lump sum amount.

The SPV becomes essential to the process as the Regulated Tariff Mechanism (RTM) assets are part of a transmission company’s (Transco) balance sheet necessitating a demerger into a SPV to unlock value. However, a demerger might not be needed for tariff-based competitive bidding (TBCB) assets as they are generally housed in a project specific SPV. The SPV shareholding would be transferred to an investor, as part of monetisation and can be bought back at a nominal cost of Rs 1 at the end of the stipulated period. For the stipulated transaction period, the investor will undertake O&M of the transmission network including the right to earn transmission charges subject to provisions of the Transmission Service Agreement.

The investor would be selected through a competitive bidding process to acquire the 100 per cent shareholding of the SPV. The tenure of the transfer agreement will be decided by the sponsoring Transco on a case-to-case basis and may normally be coterminous with economic life of the asset in case of RTM assets or residual license period in case of TBCB assets.

Identifying assets

For RTM assets, the sponsoring Transco shall identify assets which can be clearly ring-fenced, have identifiable revenue stream and clear from all litigations, preferably with vintage of up to l0 years from the date of commercial operation. The estimated book value of the assets should preferably be determined by an independent auditor appointed by the sponsoring Transco.


For TBCB assets, the tarifl adopted by the appropriate State Commission, as applicable during the tenure of the transfer agreement, shall continue to be collected by the SPV, subject to the provisions of TSA.

In case of RTM assets, the Commission may specify a premium, which may be provided over and above the prevailing return on long term government securities (5 year G-Sec) to arrive at the rate of return on equity applicable for the tenure of the transfer agreement.