The government has set the threshold at which executing authority is to monetise assets of central public sector enterprises (CPSEs), public sector undertakings (PSUs) and immovable enemy properties, apart from assts of other government organisations.
“With the approval of the alternative mechanism, it has been decided that assets having value of ₹100 crore and above would be monetised by DIPAM (Department of Investment and Public Asset Management) framework, and assets below value of ₹100 crore would be monetised by the owner (CPSE/administrative ministry/department) following their extant process,” an office memorandum issued by DIPAM said.
DIPAM is a part of Finance Ministry and mainly known as the nodal department for disinvestment.
The assets of the PSEs and government departments are diverse and spread out across the country. They could be categorised broadly as: land and buildings; brownfield operational assets such as pipelines, roads, mobile towers, electricity transmission lines, etc; financial assets such as equity shares, debt securities, other hybrid/structured finance asset units etc; and other miscellaneous assets.
Many of the assets are sub-optimally utilised and can be appropriately monetised to create greater financial leverage and value for the companies and the government, being the shareholder.
In another memo DIPM listed four categories of assets where its framework will be applicable. These include identified non-core assets of CPSEs under strategic disinvestment; immovable enemy property under the custody of a custodian; assets of other CPSEs/PSUs/other government organisations with the approval of the competent authority; and sick/loss making CPSEs under closure (optional).
It may be noted that Cabinet, its meeting last February, approved the procedure and mechanism of asset monetisation. It also had approved that an ‘alternative mechanism’ may set a value of threshold on the value of assets that would be monetised through DIPAM framework and below this threshold by concerned Ministry or CPSE. DIPAM proposed the threshold of ₹100 crore which was recommended by the Core Group of Secretaries on Asset Monetisation and later by the Alternative Mechanism.