Asset monetisation: PSU assets worth over Rs 100 crore to be monetised by DIPAM

• Assets worth below Rs 100 crore would be monetised by the owner (CPSE/Administrative Ministry/Department) following their extant process, said DIPAM

• The DIPAM has also listed four categories of PSU assets where its framework will be applicable

New Delhi: The Department of Investment and Public Asset Management (DIPAM) will be responsible for monetisation of PSU assets worth over Rs 100 crore, the nodal department for disinvestment has said in a recent notification. "With the approval of the Alternative Mechanism, it has been decided that assets having value of INR 100 Crore and above would be monetised by DIPAM framework, and assets below INR 100 Crore would be monetised by the owner (CPSE/Administrative Ministry/Department) following their extant process," said the notification.

The proposal of DIPAM to establish the threshold at Rs 100 crore was recommended by the Core Group of Secretaries on Asset Monetisation (CGAM) and has been approved by the Alternative Mechanism. 

Four categories of PSU assets where DIPAM framework will be applicable

In another notification, the DIPAM has listed four categories of PSU assets where its framework will be applicable. These include identified non-core assets of CPSEs under strategic disinvestment, immovable enemy property under the custody of a custodian, assets of other CPSEs/PSUs/other government organisations with the approval of the competent authority, and sick/loss making CPSEs under closure can also monetise their assets under the framework with the approval of the competent authority.

What is asset monetisation?

According to DIPAM, "Asset monetisation involves creation of new sources of revenue by unlocking of value of hitherto unutilised public assets… Many public assets are sub-optimally utilised and could be appropriately monetised to create greater financial leverage and value for the companies and of the equity that the government has invested in them."

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The assets of PSUs are broadly classified as — land and buildings, brownfield operational assets such as pipelines, roads, mobile towers, electricity transmission lines, etc, financial assets such as equity shares, debt securities, other hybrid/structured finance asset units etc, and other miscellaneous assets.

The backdrop

At a meeting held on February 28, 2019, the Cabinet, had approved the procedure and mechanism for monetisation of assets of PSUs. It had also approved a proposal to allow an 'alternative mechanism' to set a value of threshold on the value of assets that would be monetised through the DIPAM framework. 

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