The Cabinet Committee on Economic Affairs (CCEA) on Tuesday gave its approval to plans to monetize state-run Power Grid Corp. of India Ltd’s (PGCIL) transmission projects that were won through a bidding process.
As part of the new disinvestment playbook, the public sector unit will start with monetizing five such tariff-based competitive bidding (TBCB) assets valued at around ₹7,164 crore, held in existing special purpose vehicle (SPVs), through an infrastructure investment trust (InvIT) in the current fiscal year.
This comes against the backdrop of the coronavirus pandemic forcing an unprecedented economic disruption.
InvITs are trusts that manage income-generating infrastructure assets, typically offering investors a regular yield and a liquid method of investing in infrastructure projects.
“In the first block, Powergrid would be able to monetize 5 TBCB assets of gross block of ₹7,164 crore (as on September 2019),” the government said in a statement.
Mint reported on 20 May about PGCIL’s plans to file a draft prospectus for a $1 billion InvIT, in the first such InvIT offering from any state-owned company.
According to the government statement, the approval has been given to, “Power Grid Corporation of India Ltd (POWERGRID) to monetize through InvIT, its other TBCB SPVs including those which are either under construction or shall be acquired by the company in future, as per the directives and targets fixed by the Government of India.”
This will also lead to a change in the central public sector enterprise (CPSE) character of Maharatna SPVs and follows the new public sector enterprise policy articulated by the government earlier.
The InvIT was proposed by the government as an alternative fundraising route for state-owned companies to manage their funding requirements without having to depend on government support.
The National Highways Authority of India is also preparing to raise funds through this route.