NATIONAL MONETIZATION PIPELINE

On 23 August 2021, India unveiled the Asset Investment Pipeline for government
departments and public sector entities - the 'National Pipeline'. The program aims to
monetize key assets under the central government to the tune of INR 6000 billion over 4
years.

Purpose: -

The NMP is a new initiative to establish a strategic partnership between government and the
private sector and thus generate sustainable infrastructure funding by fundraising brownfield
infrastructure i.e. assets on which operational infrastructure has been built.

How to create an NMP Scheme?

Assets and transactions will be supported by a variety of specific contractual instruments

and financial markets, depending on parameters such as sector, nature of the asset,
transaction time, etc. Appropriate policy and regulatory interventions will be implemented as
required. Work continues to set up a monetization dashboard with real-time monitoring. The
empowerment committee has been set up by the government to implement and monitor the
program - the Core Group of Secretaries on Asset Monetization (CGAM) will be led by the
Cabinet Secretary.

Asset valuation under NMP

Across the sector, NMP monetization is limited to potential assets based on 3 factors-:

1. Potential value of goods

2. Inheritance is considered to make money

3. Number of showcase making money

Methods of estimating monetary value shown by approx.

A. Market Method- In this way, the Display Value is measured from the comparable market
functions of the identified asset classes.

B. Capex Method- In this way, the assets of those categories can be monetized by PPP-
based models that expect the private sector to incur significant costs.

C. Book Price Method - This method is used when CAPEX investment is not available or
classes are based on information about transactions such as a market.

D. Enterprise Value Method- This method is used for assets where existing budget
information is available or can be easily estimated based on assumptions or available data.

Sector-Wise classification of the legacy of the Income-Making Scheme

The assets of the road, rail, and energy sectors account for 66 per cent of the total
identification value and the remainder is owned by telecoms, aviation, etc.

The assets under the national monetary pipeline are:

1. Roads- Total road assets up to 26,700 km, representing 22% of national roads (QL) will
be considered for monetization over the next 4 years. The indicated monetization will be
estimated using the market approach. The government is expected to attract INR 1.6 trillion
(US $ 21.55 billion) by monetizing these road assets through potential models such as Toll
Operate Transfer (Tot) and Infrastructure Investment Trust (InvIT).

2. Trains- The railway sector is set to cash out assets with an indicator value of 152.5 billion
rupees (20.70 billion dollars) over the next four years. Key rail assets identified for revenue
generation include 400 railway stations, 90 passenger trains, 1400 km of tracks on one
route, 741 km of backbone railway, 15 railway stadiums and selected railway colonies, 265
railway-owned product cabins, and 4 hill railways. The cash value of this indicator is
estimated according to the investment method of railway stations, passenger trains, railway
colonies and private cargo terminal facilities, but a book value approach is adopted for the
estimation of the cash value of track infrastructure.

3. Power transfer- Transmission assets that will be considered to generate revenue over
the next four years when combined at 28,608 km, including 400 kilovolt (KV) and Power Grid
Corporation of India Limited (PGCIL).

4. Natural Gas Pipes- Over the four years, the total assets considered for revenue
generation will form approximately 23% of India's total pipeline asset base. In this division,
the COT (CarryOperateTransfer) concession model was conceived as a suitable model in
the pipeline.

5. Petroleum, Petroleum Product Pipelines and other goods- The asset classes
identified for revenue generation in this sector include a 733 km LPG pipeline, a 3196 km
petroleum product pipeline, two hydrogen production plants and ESG assets (wastewater
treatment plant, sulphur recovery equipment, flare gas recovery system).

6. Telecommunications- Investment in telecom assets is expected to reach INR 351 billion

(US $ 4.8 billion). Identification calculations are based on the Capex Approach for Bharatnet
fiber assets and Market Approach for tower assets.

7. Warehousing- The government intends to monetize the assets of state-owned

enterprises, Food Corporation of India (FCI) and Central Warehousing Corporation (CWC),
at an estimated cost of INR 289 billion (US $ 4 billion) and the Capex Approach used for this
measure.

8. Aviation- Government monetizes 25 Indian Airport Authority (AAI) managed airports to

FY25, including Varanasi, Udaipur, Dehradun, Indore, Ranch, Coimbatore, Jodhpur,
Baddara, Part and Vijayawada, Chennai, Nagpur, Babaneshul. These revenue drives are
estimated to raise the equivalent of INR 207.8 billion (US $ 2.8 billion) in response to the
Capex Approach.

9. Shipping- A total of 31 shipping assets worth INR 128 billion ($1.8 billion) will be
generated between Fiscal 22 and Fi 25. The Capex method was used while estimating this
value. The PPP model will probably be used in this area, and it will be implemented by the
Department of Ports, Navigation and Waterways.

Concerns raised by Stakeholders

Expected transfer of assets into the hands of state leaders has been a criticism of
government programs, especially as these have a number of national strategies. It is
reported that in the long run, the nature of these programs will affect the interests of citizens
as it is not yet clear what checks and prices the government will impose on private players.
Concerns have also been expressed that models of equity and the lack of resources that can
be identified in various assets are seen as a challenge to attract various stakeholders, which
undoubtedly increases the number of corrupt interests. In addition, there is no way to resolve
disputes mentioned on a map provided by the government.

The conclusion

The National Pipeline is a project launched by the Central Government on 23 August 2021.
This project is a public-private partnership. There are three main methods for measuring
property classes. The government provides for the segregation of the income-generating
system. Stakeholders raised concerns by discussing the various challenges of the project.