Economy

Centre seeks States’ support for disinvestment, asset monetisation

P Manoj Mumbai | Updated on April 11, 2021

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Prods States to pursue divestment and monetisation

The Centre has requisitioned the help of the state governments and union territories for the smooth implementation of disinvestment, asset monetisation and the national infrastructure pipeline (NIP) projects.

The Centre is also prodding the State governments and Union Territories to go for monetisation of brownfield infrastructure assets to unlock value of idle assets and undertake disinvestment of state level public sector enterprises to raise funds for new infrastructure development.

NITI Aayog, the Government’s think tank, has “offered” its services on end-to-end support on asset monetization and disinvestment to states/union territories in identifying, structuring and rolling-out of transactions, according to a communication sent to the state governments.

Following a request from the Centre, the State governments have or are in the process of appointing nodal officers for asset monetisation of Central Government assets in their respective states.

“Law and order support from the states is very important,” said a government official briefed on the development.

“Support from the states is also needed in removal of encumbrances, removal of encroachments, timely change of land use plan, facilitating no objection certificate (NOC) etc. This will be a win-win situation for both Central and states governments,” he added.

Taking the state governments on board for its disinvestment, asset monetisation and national infrastructure pipeline projects is critical for the success of the program as some of the PSUs, assets and projects have been built with the support of the States on land acquisition and other statutory clearances.

It has also become essential for the Centre to carry the states along given the prevailing mood among some political parties, trade unions and some opposition rules state governments against privatisation of PSUs.

For instance, the Cabinet approval for privatisation of Rashtriya Ispat Nigam Ltd (RINL) which runs the Visakhapatnam steel plant has triggered a wave of protests in the port city, following which the Andhra Pradesh government asked the Centre to desist from the sale of the steel maker.

“The Centre feels that asset monetisation has unique challenges, which needs to be overcome by concerted efforts of both the Central and the state governments,” the official said.

The States can also pursue monetisation of assets and projects such as state highways and expressways, transmission towers, distribution entities, power generation, minor ports, state airports, waterways, jetties and multi-modal terminals, logistic parks, bus terminals, sports stadiums, warehouses, rental earning assets etc.

Asset Monetisation can explore options including privatization, merger, demerger or through public-private-partnership (PPP) models such as toll, operate and transfer (ToT) or operate, maintain and transfer (OMT), the NITI Aayog has suggested.

Published on April 11, 2021

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