Govt to soon set up a company for monetisation of privatisation-bound PSU assets

• An SPV in the form of a company would be set up to hold these assets which would be monetised to fetch value to the exchequer, said the DIPAM Secretary
• The Department of Public Enterprises (DPE) will be tasked with undertaking asset monetisation

New Delhi: The Ministry of Finance will approach the Cabinet soon to seek a nod for the setting up of a company or a special purpose vehicle (SPV) for transfer and monetisation of non-core and land assets of privatisation-bound PSUs, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey has said. "An SPV in the form of a company would be set up to hold these assets which would be monetised to fetch value to the exchequer," said the DIPAM Secretary.

"We are talking about a company which will be there for many years, which will specialise in handling surplus land and non-core asset monetisation. We are expecting it shortly. As soon as we get Cabinet approval," said Pandey.

Asset monetisation: Privatisation-bound PSU assets to be monetised

The DIPAM Secretary said that the assets of PSUs which are slated to undergo privatisation will be transferred to the SPV and monetised. "There are some CPSEs for strategic disinvestment and we feel certain portion of land is not really worth going with the company and those assets could be monetised," said Pandey. The Department of Public Enterprises (DPE) will be tasked with undertaking asset monetisation.

Background

The government has already announced its intention to monetise idle government-owned assets in a big way in Budget 2021-22. In fact, in the recent disinvestments that are being carried out by the Ministry of Finance, the Centre has formed a separate SPV for monetisation of surplus land and assets owned by the privatisation-bound PSUs. For both BEML Ltd and Air India, the Centre formed an SPV for the monetisation of non-core assets. The idea behind ridding PSUs of their surplus assets is that it will enable a fair valuation of the core assets of a PSU, which potential investors are interested in investing.  

For FY22, the DIPAM is targeting to conclude the strategic disinvestment of Bharat Petroleum Corporation Ltd (BPCL), Shipping Corporation of India (SCI), IDBI Bank, BEML, Pawan Hans and Neelanchal Ispat Nigam Ltd (NINL).

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