The department of public enterprises (DPE), which is now under the finance ministry, will spearhead the government’s monetization drive of non-core assets such as land and buildings of central public sector enterprises through a special purpose vehicle (SPV), department of investment and public asset management (DIPAM) secretary Tuhin Kanta Pandey told Mint in an interview. The name of the SPV will soon be announced after the Union Cabinet gives its go-ahead, Pandey said.
In July this year, as part of reorganization ahead of the Cabinet expansion, DPE, which had been part of the ministry of heavy industries and public enterprises, was made the sixth department of the finance ministry. “There is a non-core asset management framework that DIPAM had initiated. Now that DPE is part of the ministry of finance, the Union finance minister (Nirmala Sitharaman) has decided DPE can handle the sale of non-core assets,” Pandey told Mint.
In November 2020, DIPAM had signed an agreement with the World Bank for advisory services on non-core asset monetization. The World Bank advisory project, approved by the finance minister, was aimed at analysing public asset monetization in India and benchmarking its institutional and business models against international best practices, as well as supporting the development of operational guidelines and capacity building for their implementation. “It is expected that this project would facilitate and accelerate the non-core asset monetization process and help unlock the value of these unused/ marginally used assets that have the potential to substantially augment financial resources for further investments and growth,” the finance ministry had said.
The sale of land and buildings of Air India will be handled by DPE under the SPV, Pandey said. “We are talking about non-core assets such as MTNL, BSNL properties, which may have to be sold. If we are disinvesting BEML, we will do demerger and those non-core assets need to be sold. The part that earlier DIPAM was doing, now will be carried out by DPE,” Pandey said.
Asked how big the size of non-core assets could be compared to the core assets for which the government has set a target to garner ₹6 trillion by FY25, Pandey said it will evolve over time.
“That’s why we have announced an SPV to do that because several such non-core assets can be identified. For example, the land of a company under closure may come up. The SPV can manage the land sale directly or even without changing the title. SPV can help them do it with a management fee,” he said.
Pandey said the SPV is in the conceptual phase. “First you have to set up a company and then recruit people with competence who can manage it. It is a medium- to long-term project. It takes two to three months for the recruitment process. However, this will be a very important instrument for the next five to ten years as more and more land is identified. Today nobody is touching surplus land,” he said.
