Login With Google
National Monetisation Pipeline (NMP)
Why in news:
- Minister of Finance & Corporate Affairs recently announced the launch of the National Monetization Pipeline. Niti Aayog has been consulted in preparing the pipeline.
- According to the NMP estimates, Centre can generate an aggregate monetisation potential of Rs 6 lakh crores through core assets over the next four years (FY 2022-25).
- An asset monetisation dashboard is also created by the government to monitor the NMP's progress.
- It will complement the National Infrastructure Pipeline(NIP) that was announced in 2019 for a period up to 2025. It aims to invest 102 lakh crore in infrastructure.
The National Monetization Pipeline (NMP):
- Union Budget 2021-22 referred to Asset Monetisation as an alternative way to raise funds for infrastructure.
- Asset Monetisation:
- Aim: To generate new sources of revenue for the government by unlocking the value of unutilized or underutilized public assets.
- Method: Transferring only the revenue rights (not ownership) of brownfield projects to private sector. This will enable raising of revenue which will be used for infrastructure generation in the country.
- Unlocking value of Public Assets: Public assets are a crucial resource for the economy but are under-used and were not monetized to their full potential.
- NMP: NMP will provide a clear framework for their monetisation and enable the private sector investors to choose from a list of assets for investment. A four-year pipeline of brownfield infrastructure assets is included in the report.
- Sectors: Roads, railways, power, aviation, oil and gas, telecom, ports and distribution and warehousing are some of the sectors for asset monetisation.
- Attracting private sector:
- Monetisation of rights and not ownership.
- Only brownfield assets de-risked from execution risks will be part of it => attractive for private sector.
- Structured partnership with clearly defined contractual frameworks & transparent competitive bidding.
- Contractual partners will have to adhere to Key Performance Indicators and Performance Standards.
Significance:
- Unlocking value: Public assets will be able to unlock their full value through this medium-term roadmap.
- Revenue and Employment: The project will help to generate returns for PSUs and generate jobs.
- Financial Management: It will give a clearer picture of the value of public assets and enable better financial management by Government.
- Infrastructure development: It will provide the much needed resource for infrastructure development in the country.
- Inclusive Development: Development of infrastructure will boost the economy, give better opportunities to all, improve ease of doing business and enable inclusive development.
- Lease and not outright sale: Since this involves a lease and not an outright sale, it is expected to face less opposition.
- Benefits to PSUs: It will help public sector to reduce costs associated with boosting their capital base and facilitate technology upgradation.
- Mobilization of Private resources: If successful, it will harness the resources of private sector for national development. It will also bring in technology and best practices from private sector.
Challenges:
- Identifying revenue streams: Revenue streams for various assets are not clearly identifiable.
- Previous failures: Government companies such as Air India and BPCL are slow to privatize.
- There is a low level of capacity utilization in the pipeline network for gas and petroleum.
- Investors are not interested in highways less than four lanes as they don't generate sufficient toll revenue.
- Grievance redressal mechanisms will have to be strong to attract private sector.
- Regulation of tariffs for power sector assets makes it unattractive for Private sector.
Conclusion:
- The NMP is a landmark initiative with multiplier effect benefits for the economy. Impediments in the way of implementing it must be removed to attract private sector participation without compromising the interest of the consumer. Transparent contracts, robust monitoring and fair grievance redressal mechanism for all stakeholders will be necessary for its success.
Source: the Hindu and Indian express