Government to fast-track asset monetisation as disinvestment plan flounders

The railways is one of the ministries that will present its asset monetisation plan.

The government is looking to fast-track asset monetisation and a meeting of a core group of secretaries, led by the cabinet secretary, has been called on April 29, sources have said. The move comes as the disinvestment plan takes a hit, with the privatisation of Bharat Petroleum Corporation of India (BPCL) on hold.

Vedanta Group’s Chairman Anil Agarwal told Moneycontrol in a recent interview, “It (BPCL divestment) will not happen. They’ve said that they have withdrawn the offer, they will come back with a new strategy." “Generally, they have given a statement, they're not going ahead. Not in this format.”  Vedanta was one of the companies that had shown interest in BPCL. The government is yet to make a statement on BPCL.

According to sources, the April 29 meeting would largely focus on two areas. First, the final year-end (FY 2021-22) target achievement by different ministries and second, the preparedness for the transactions in the pipeline for the financial year 2022-23.

Senior officials from 12 ministries have been asked to share the roadmap for the asset monetisation of their departments.

These ministries are petroleum & natural gas, ports, shipping and waterways, railways, civil aviation, power, coal, mines, road transports and highways, tourism, food and public distribution, sports and telecommunication.

The government has already selected assets of these ministries under the National Monetization Pipeline (NMP).

In the meeting, each ministry would share the plan for asset monetisation for the current fiscal and may even be asked to speed the process up, sources said. Based on the feedback from the officials, the government may tweak the process if needed, they said.

Unveiled in September 2021, NMP aims to unlock value in brownfield projects by engaging private sector participants, transferring to them revenue rights while the ownership remains with the government.

Last year’s experience has given a boost to the government. While it was estimated that Rs 88,190 crore would be moped up in 2021-22, initial estimates suggest that the government succeeded in monetising assets worth Rs 1 lakh crore. For the financial year 2022-23, the government is looking at Rs 1,62,422 crore.

While asset monetisation has gone well, the government missed last year’s disinvestment target by a wide margin. It realised only Rs 12,423 crore from disinvestment against a revised target of Rs 78,000.

The BPCL development won’t help either. The government had announced the strategic divestment of BPCL in the Union Budget 2019, with the cabinet clearing the stake sale in the November of the same year.

The government wanted to sell its entire 53 percent stake in BPCL to private players in 2021-22 but after delays, the target was shifted to 2022-23. Vedanta Group, Apollo Global Management, and private equity major I Squared Capital-backed Think Gas were among those who showed interest in buying the state-owned refiner.