Explained | How Rs 6 lakh crore-National Monetisation Pipeline will work; assets that will be monetised

The total indicative value of NMP for core assets of the central government has been estimated at Rs 6 lakh crore over the four-year period FY22 to FY25

Finance Minister Nirmala Sitharaman unveiled the National Monetisation Pipeline (NMP) on Monday, which was announced earlier in 2021-2022 Budget to boost infrastructure spending and spur economic growth in Asia's third-biggest economy.

It includes unlocking value by involving private companies across infrastructure sectors -- from passenger trains and railway stations to airports, roads and stadiums.

Also read: Legalised loot, organised plunder: Congress on National Monetisation Pipeline

The government aims to hand over already built assets such as gas pipelines, roads, railway stations and warehousing facilities, among others to the private sector to operate on a long-term lease, Amitabh Kant, chief executive of government think tank NITI Aayog said on Monday.

How will the National Monetisation Pipeline work?

Under the plan, private companies can invest in projects for a fixed return using the InvIT route as well as operate and develop the assets for a certain period before transferring it back to the government agency. Some assets such as warehouses and stadiums can also be given on a long-term lease for operations.

Stating that there is no transfer of ownership or land, Sitharaman said, "The NMP talks about brownfield infra assets where investments have already been made, where there is a completed asset which is either languishing or which is remaining not fully monetised or which is remaining underutilised."

"So by bringing in private participation into this, you are going to be able to monetise it better, and with whatever resources you obtain through the monetisation, you will be able to put in further investment into infrastructure," she said.

Which assets will be monetised and how

The mode of monetisation for the identified assets will be Public-Private Partnership (PPP)-based concessions on Operations, Management and Development Agreement (OMDA) model. The assets are largely managed under the Sports Authority of India (SAI) and categorised into three broad categories – stadiums, regional centres and academic institutions.

As many as 25 airports under Airports Authority of India (AAI), including the ones at Chennai, Bhopal, Varanasi and Vadodara, as well as 40 railway stations, 15 railway stadiums and an unidentified number of railway colonies have been chosen for getting private investments.

The telecom sector will give Rs 35,100 crore from monetising 2.86 lakh km of BharatNet fiber and 14,917 signal towers of BSNL and MTNL. Close to Rs 29,000 crore each is estimated from monetising warehouses and coal mines. Monetising 8,154 kms of natural gas pipelines is estimated to give Rs 24,462 crore and 3,930-km product pipelines another Rs 22,504 crore.

In the current fiscal year, the government expects to list state-run Life Insurance Corp. of India, and privatise state-run oil refiner Bharat Petroleum Corp Ltd and state carrier Air India Ltd.

(With agency inputs)