Utilities Finalize Asset Monetization Plan Templates


NEW DELHI : Three state-run power companies, NTPC Ltd, NHPC Ltd and Power Grid Corp. of India Ltd (PGCIL), have come up with a combination of models to get the most out of their transmission and hydro and renewable assets under the National Monetization Pipeline (NMP) Plan, the secretary at the Food Union, Alok Kumar mint.

These models include creating a holding company and then divesting the stake in the holding company, monetizing cash flows and creating infrastructure investment trusts (InvITs), Kumar said.

The electricity sector represents 14% of the total assets proposed under the NMP. Electricity transmission assets total 28,608 km of circuit for monetization, representing 45,200 crore. Power generation assets totaling 6 gigawatts (GW) of hydroelectric and renewable energy assets represent 39,832 crores.

“It will be a mixture of models. Somewhere it will be the InvIT model. Somewhere it will involve the creation of a holding company, then the sale of the stake in the holding company and somewhere it will be for example the monetization of cash flows. There will therefore be three-four models, which will suit the assets concerned. The fundamental objective is that there is no loss of value of public assets,” Kumar said.

InvITs are trusts that manage income-generating infrastructure assets, typically offering investors a regular return and a liquid method of investing in infrastructure projects. The InvIT route was proposed by the government as an alternative fundraising route for public companies to manage their financing needs without having to rely on government support.

“We were given targets according to the NPM. Our three companies, NTPC, NHPC and PGCIL, must meet the targets. Thus, they prepared detailed action plans. They have also settled on the models they will follow for asset monetization and we are on track to meet our targets so that there is no asset impairment and we realize the best value possible of these assets,” Kumar said.

“We are in constant contact with Niti Aayog and the Ministry of Finance. We have had several meetings and there are certain tax issues and certain authorizations to be taken, so we are working with Niti Aayog and the Ministry of Finance. As far as the Department of Energy is concerned, we are absolutely on track with the asset monetization targets,” Kumar said.

In addition, India’s largest power generation utility, NTPC, is in talks with state-owned SAIL Ltd to sell its stake in NTPC-SAIL Power Co. Pvt. Ltd (NSPCL), a 50/50 joint venture, to the steelmaker, as reported mint earlier. NSPCL, which was established in March 2001, supplies electricity to Chhattisgarh, in addition to the union territories of Dadra and Nagar Haveli, and Daman and Diu, as well as to SAIL.

The joint venture took over captive power plants from SAIL’s steelworks at Durgapur in West Bengal, Rourkela in Odisha and Bhilai in Chhattisgarh. State-owned enterprises under the Union Department of Energy had made capital expenditures of 40,395.34 crores through December and also reached 80% of Investment target of 50,690.52 crores for the financial year 2021-22.

Electricity availability in India has increased to 10 p.m. in rural areas and 11.5 p.m. in urban areas, according to Minister of Power and New and Renewable Energy Raj Kumar Singh.

As part of its energy transition efforts, India is also working to electrify the economy by developing action plans for greening electricity.

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