The power ministry has moved a cabinet note seeking approval for monetisation of the transmission lines of the Power Grid Corporation of India LtdNSE 3.61 % (PGCIL) through infrastructure investment trust (InvIT). It aims to raise ₹10,000 crore through this to help boost PGCIL’s spending plan, a senior official, told ET, requesting not to be named.
According to the official, although these are turbulent times, the government is going ahead with those asset monetisation plans that have a definite revenue stream, like the transmission lines. “Once approved, government will invite bids as it aims to complete the process by middle of this year,” the official said.
The idea is to help PGCIL raise funds for its spending plan and reduce its debt burden, while increasing the dividend payout to the government and other stakeholders.
PGCIL spends between ₹15,000 and ₹20,000 crore every year on network expansion. The company has a total asset size of over ₹2 lakh crore and investments of about ₹1 lakh crore in setting up transmission infrastructure. The official cited earlier said the plan is to set up InvIT and transfer some of PGCIL’s operational transmission assets to the proposed trust. In return for such transfers, the company will get tradable units from the trust that could be used in the market to mobilise funds.
This would allow the company to monetise its existing assets, which under normal circumstances would have given returns only after years of operation. Transmission projects are long-gestation projects where returns start accruing only after 20-25 years.
The Securities and Exchange Board of India has allowed Indian firms to launch investment trusts to help cash-strapped developers get easier access to funds, while also creating a new investment avenue for institutions and high net worth individuals.
Source: Economic Times