The DIPAM has recommended a number of options to the government for strategic disinvestment of state-owned enterprises New Delhi: For monetisation of non-core assets of Central Public Sector Enterprises (CPSEs), the government is considering a slew of options to meet the Rs 90,000-crore target it has set for itself. The Department of Investment and Public Asset Management (DIPAM) has recommended a number of options to the government for strategic disinvestment of state-owned enterprises. However, a final call on the matter would be taken by the Finance Ministry.

The REIT

One of the options recommended by DIPAM is an investment model which was although introduced by SEBI in 2014, but it hasn’t really taken off till now — Real Estate Investment Trusts (REITs). REITs are instruments for investments in real estate where land assets are transferred to a trust which provides an investment opportunity for institutional investors.

The other options on the plate

Along with the REITs model, the government is also looking to lease out or sell land assets of PSUs which have been identified for strategic disinvestment. Another option proposed by DIPAM is ‘Direct Contractual Approach’ under which large upfront payments for the land could be made to the government, coupled with small annual payments or small upfront payment coupled with annual payments.

The NHAI’s TOT model

Another option that the government could reach out for is the ‘Toll-Operate-Transfer’ (ToT) model used by the National Highway Authority of India (NHAI). Under this model, the NHAI has entrusted the operations of an existing revenue-generating asset to a private party for a specified period on specific terms and conditions.

Govt could also transfer land to another PSU

One of the other possibilities is that the government could transfer the land assets to state-owned NBCC for developing affordable housing or central/state government offices. “Adoption of one or the other model would depend upon many factors like type and use of asset, objective of monetisation and various other factors,” an official said.

The backdrop

Earlier this week, the DIPAM notified guidelines for monetisation of non-core assets of CPSEs and immovable enemy properties, in line with a Cabinet decision taken in February. According to the guidelines, after assets have been identified for strategic disinvestment, PSUs will have 12 months to monetise them, failing which the government may put restraints on budgetary allocations to them.